Five years later

Ok, Im back to blogging after a five year hiatus! I paused blogging, but I didn’t pause investing and business in the Ivory Coast – more on that in upcoming posts!

The Ivory Coast has done pretty well the last five years which ever way one measures it, I think. The most obvious – but not unproblematic – indicator is GDP growth.

As I couldn’t find a list of top countries in the world by GDP growth for the last five years, I put together such a list myself using World Bank GDP figures for 2011 and 2016 (real GDP in year 2000 dollars):

Rank Country Compounded annual growth rate GDP 2011 (USD, bn) GDP 2016 (USD, bn)
1 Ethiopia 9.48% 33.28 52.35
2 Ivory Coast 9.26% 23.79 37.05
3 Turkmenistan 8.84% 25.90 39.56
4 Uzbekistan 7.96% 42.60 62.47
5 Laos 7.59% 7.70 11.10
6 Myanmar 7.51% 52.31 75.12
7 China 7.30% 6,682.00 9,505.00
8 Iraq 7.30% 149.00 211.90
9 Rwanda 7.18% 6.22 8.80
10 Cambodia 7.14% 12.04 17.00
11 Mongolia 6.93% 8.43 11.79
12 Tajikistan 6.90% 6.06 8.46
13 India 6.88% 1,767.00 2,465.00
14 DRC 6.83% 21.93 30.51
15 Tanzania 6.65% 33.89 46.77
16 Philippines 6.58% 206.90 284.50
17 Niger 6.51% 5.85 8.02
18 Panama 6.50% 32.33 44.30
19 Bangladesh 6.46% 122.70 167.80
20 Mozambique 6.43% 10.88 14.86
21 Vietnam 5.90% 123.20 164.10
22 Dominican Republic 5.75% 55.63 73.57
23 Kenya 5.47% 42.44 55.39
24 Turkey 5.46% 857.7 1119
25 Sri Lanka 5.33% 61.49 79.71
26 Indonesia 5.30% 801.70 1,038.00
27 Cameroon 5.28% 24.6 31.81
28 Nicaragua 5.15% 9.31 11.97
29 Bhutan 5.11% 1.71 2.20
30 Malaysia 5.07% 268.5 343.9

The 2011-2016 period includes the drop in oil prices, causing countries where GDP depends on oil exports to drop out of the toplist, showing a more fundamental and possibly more sustainable growth.

Choosing 2011 as start year pushes up the  Ivory Coast somewhat, but the growth is nevertheless impressive, and very visible on the ground in Abidjan.

As there are many issues with the GDP metric, especially in developing countries – difficult to measure, large informal sectors, possible to manipulate,  difficult to account for technological progress, etc – to get a fuller picture of how the economy is doing, and the wellbeing of the people, it is useful to look at other indicators as well.

For the Ivory Coast I’m thinking it would be interesting to look at more or less quirky indicators. Ideas:

  • Number of international flights and destinations from Abidjan. Can’t be manipulated, easy to measure, and should be a pretty clear relationship between an economy doing well and more demand to flying to a place.
  • Tax intake. Much easier to measure than GDP, an increase could theoretically be caused not by the economy doing better, but by increased taxes or increased efficiency in tax collection, but that would be interesting in itself.
  • Cost and time to traverse the country in a truck with goods. Both in terms of road quality and number of roadblocks and cost of bribes.
  • Demand for aspirational / middle class goods and services. How busy and profitable are shopping malls? Whats the demand, and increase in demand for broadband internet? Personal car sales/imports?
  • Stray dogs, frequency and how well fed they are. Should be less and better fed as wealth increases.

Podcast with the Finance Minister

Charles Koffi Diby speaking

Today I  listening to an IMF podcast [in French] with the Ivorian Finance Minister Charles Koffi Diby. Quite interesting – at least for readers sharing my somewhat geeky interest in Ivorian economics and politics.

Diby says:

There is a tendency to fantasise or imagine that there is a lot of money [in the public finances] and that it’s only the privileged who benefit  and that the managing of public finances is something sacred.  We have opened it up. Lets take an example; we make a budget release where we  invite the entire population, all social strata,  the civil society, economic operators, the public sector – everybody – and we present the budget with all its components and ask people to ask questions. And then we publish the entire budget on our website. Every quarter we present a follow up on the budget in the Council of Ministers which is made available online. That is, it becomes available to everybody. I think that also reduces social tensions, because everybody knows what’s in the state coffers and what we do with it.

I like that he stresses transparency, and the budget is really available –  in reasonable detail – at the Ivorian government’s website.  Though, I’d say that the main reason for transparency of the budget is linked to having strong/inclusive institutions and to reduce corruption – not to improve people’s perception.  Well, guess when you are in government you can’t say “we need to be transparent with the budget, because otherwise we’ll steal from it”.

Dooo -ing eeeh bisness

We are accompanying a process  so we can move from the primary agriculture sector to the secondary sector, ie food production. We are working on attracting direct foreign investments by improving the business climate, the security for people and property, and all procedures and especially that we can,   with regards to, doing business, be as good ranked as possible. So, it’s an improvement of our investment code increasing transparency and offering more opportunity. To summarise, it’s about improving the competitiveness of our economy.

Good stuff, and from what I have seen this looks to be more than empty words.  And I love it that scoring high on the World Bank’s Doing Business Index appears to be an outspoken government priority. It’s also an added bonus to hear French-educated Ivorian Ministers struggling with mid-sentence English words:  au niveau de  dooo -ing eeeh bisness etre mieux classe…

Interviewer: What’s your vision for the Ivory Coast in 5 years?

Diby: In 5 years we’ll be a country with positive double digit growth. We have the capacity. The President has outlined it clearerly in the actions we’ll take. The Ivory Coast will surprise the world positively.

Given that Ivory Coast’s population increases with 2% per year, even just a sustained growth in the 5%-8%  range would be great, and double digit growth is possible, but I’m not as confident as Charles Diby that it will happen. Reuters had a pretty upbeat article a couple of days ago where a bank analyst at Standard Chartered expressed the view that high growth is sustainable in the Ivory Coast. By high growth he means 5% – 6% though, not double digits.

For my investment case for the the Ivory Coast – especially for real estate – I think it’s actually enough if governance goes from  disastrously bad (as under Gbagbo) to just plain bad – fundamentals (demography etc) are that good.  My Cocody house had a good rental return and was increasing in value already under Gbagbo  – that is, until the crisis/war happened and the shops next to it were burnt down.

Now it’s looking like governance is going to somewhere in the ok to excellent range. The jury is still out on this one.

Encouraging Signs 2

I’ve been collecting encouraging signs coming out of the Ivory Coast lately, and couldn’t help noticing a few not so good signs as well. First the good news:

Privatisation/liquidation of Banks

In the end of January Ivory Coast’s President Ouattara said that four Ivorian state owned banks “only existed  to finance certain political leaders”, and opened up for them to be closed down or privatised. “If we (the state) should own a Bank it should respond to a specific objective or be liquidated progressively.” Ouattara said.

Source: L’Inter: Depuis Paris, le chef de l`Etat annonce la privatisation des banques publiques

Now what actually happens is a much stronger encouraging sign compared to what politicians say, so this is to be followed up on.

Even countries at the top of the Transparency International Corruption Index have problems with corruption at state owned enterprises, so how the Ivory Coast deals with these kind of things matters for grand corruption. Just the fact that Ouattara is frank about how these banks operated is an encouraging sign. I can imagine a situation where someone in Ouattara’s position would have kept the Banks going just like before, but for the benefit of himself and his inner circle instead of the previous regime.

Liberalisation of the Media

According to an AFP story from the beginning of March, the ivorian government plans to offer licences for 5 new private TV-channels to complement the public RTI and RTI2 channels.

Again, this is politicians speaking of what’s going to happen in the future and not something that has happened, but I see media and especially TV as a bellwether for authoritarian tendencies.  One of  Putin’s first priorities when coming to power was to stop a  humour show making fun of Russia’s politicians, and after that he proceeded to make all major tv-channels propaganda arms for the government, while still allowing critical voices in print media.

Gbagbo actually had a policy similar to Putin’s. Gbagbo was forced to allow opposition voices on the TV in the run-up to the 2010 elections due to UN pressure and the peace process, but when the result were out, national TV was straight away turned into a pro-Gbagbo propaganda machine and foreign cable channels were blocked, while opposition newspapers weren’t dealt with as quickly.

Guess it’s a dictator’s calculation that few people read newspapers and that TV is a much more efficient tool to reach the masses. So if a leader works on creating five new private TV channels – it’s a good sign. Someone with authoritarian tendencies would instead focus on controlling the existing TV channels.

More flights to Abidjan

Here’s a very concrete encouraging sign for the Ivorian economy: Brussels Airlines announced in the beginning of March that they will increase the frequency of flights from Brussels to Abidjan from 4 per week to 7 per week.

Praise from the IMF

The biggest positive news came from the IMF on the 15th of March.  Essentially, the IMF said the Ivorian economy is stronger than expected, that execution of the budget was above expectation, that good progress was made on various reforms and that conditions for the  IMF-World Bank Heavily Indebted Poor Country (HIPC) scheme were met. I’m not sure I’ve ever heard such a positive statement from the IMF.

Here’s the Reuters story about it:

ABIDJAN (Reuters) – Ivory Coast’s economy will grow 8 percent in 2012 after contracting 5.1 percent in 2011, on stronger-than-expected post-conflict recovery, the International Monetary Fund said on Wednesday after meeting with Ivorian authorities.

The IMF also said the world’s top cocoa-growing nation has made progress in reforming its cocoa sector, a key condition which would enable it unlock debt relief under the IMF-World Bank Heavily Indebted Poor Country (HIPC) scheme by June.

“The rate of economic growth for 2012 will be 8 percent and inflation below 2 percent,” IMF mission chief in Ivory Coast Doris Ross told journalists after the meeting.

“The economic recovery is stronger than expected and we are pleased with the efforts made in the reform of the cocoa sector,

and mission appreciates the execution of the 2011 budget and revenue growth in 2012,” Ross said.

Ross confirmed the World Bank’s view, which said in February that the reform of the cocoa sector, meant to provide farmers with a minimum price for their produce, was on track.

“Ivorian authorities have made considerable efforts and could benefit from a substantial debt reduction through the HIPC in June,” Ross said.

Emerging markets strategist at Standard Bank Samir Gadio said the IMF’s suggestion that the HIPC completion point could be reached by June was good news because the market had factored in the possibility of a delay over the reforms which have not been fully implemented.

He added that the good news, as well as the smooth power shift in the country with the appointment of a new prime minister, contributes to making “the upward price trend of the Ivorian Eurobond … virtually self-fulfilling.”

And from pro-government newspaper Le Patriote [in French]:

Elle a souligné que les autorités ont accompli des progrès considérables dans la réalisation des déclarations des déclencheurs relatifs au point d`achèvement. Et l`aboutissement pourrait servir de base pour l`atteinte du point d`achèvement Ppte d`ici fin juin 2012 et permettra à la Côte d`Ivoire de bénéficier d`un allègement global de sa dette. « Les résultats économiques en 2011 ont été mieux que prévus. (…) L`exécution du budget a aussi été mieux que prévue. Les dépenses sont restées dans la limite des objectifs fixés dans le budget et les allocations pour les dépenses d`investissement et de lutte contre la pauvreté ont été utilisées dans leur totalité. Tous les critères de réalisation quantitatifs pour fin décembre au titre de l`accord Fec ont été respectés. », a relevé Doris Ross. Précisant que de “ bons progrès ont ét réalisés dans l`avancement des réformes structurelles“. « La mission se félicite de l`achèvement du recensement dans la Fonction publique, l`approbation de la reforme du régime de retraite dans le secteur privé, la mise en place de tribunaux commerciaux, l`adoption de la loi sur l`exécution des décisions d`arbitrage et la création de centres de facilitation aux entreprises », a déclaré Ross.

Less encouraging signs

As to the bad news, nothing really serious, but worth mentioning:

-Ouattara started out imposing strict work hours with an early start for his ministers.  Now it seems – according to a second hand account – that it wasn’t possible to enforce an early start in the long run, and that the government has gone back to starting the work day later.  Also, I don’t think anything came out of the plan to give government ministers individual marks. Ok, maybe it wasn’t as good an idea as it originally sounded, but it would have been interesting to see.

-In handling the informal sector, my take is that the Ivorian government should strive to legalise, establish property rights and regulate it (lightly). I don’t have much data yet, but there seems to have been occasions where livelihoods of people in the informal sector have simply been destroyed by the government. It’s done for arguably good reasons like public health, but it’s still a worrisome sign.  Here’s one story from Reliefweb: Côte d’Ivoire: Livelihoods lost to bulldozers

-The transport sector reforms.  I’ve already mentioned the proposed import restrictions, but it also seems the government want private businesses in the transport sector to get subsidised loans to import new cars of a certain brand  (Mercedes) selected by the government. Apparently the Minister for transport Gaoussou Toure visited a Mercedes plant in Stuttgart  in Germany recently. I think there just isn’t enough purchase power for urban transport in Abidjan to support taxis and woro-woros being expensive new Mercedes. If the government pays for it by subsidising loans – well, it seems a waste of money compared to use older (but still good and environmentally sound) cars.

Also this whole reform sounds like a French style “dirigiste” plan for the government to manage and run private sector activities, which in Africa (and elsewhere) quite often end up in corruption and disaster.

I’m still kind of hoping that the Mercedes are only for bus or minibus use, and that public transport will be strengthened, but that the taxi / woro-woro business will be left mostly alone. The details are not yet clear.

Car prices

Overflowing with cars

Latest news is that both cars have arrived to Abidjan Port and the import process is underway.  So it looks like they will make it before any import restrictions take effect.

The thing is, ex Prime Minister and ex Rebel Leader Guillaume Soro is to become Chairman of the Ivorian Parliament.   There is a rule saying that the Chairman most be at least 40 years old, and Soro happens to be 39, so it’s looking like the Parliament elected in December is waiting for Soro to turn 40 to start sessions. Things like this happen when you have a culture that reveres old age, but is in turbulent times where  coups, revolutions and wars propel young people to positions of power they wouldn’t otherwise reach.

No parliamentary sessions means that no import restrictions are enacted.  It seems I’m not the only one taking advantage of this, as the Port of Abidjan is overflowing with cars and the import process takes longer than usual. I’m expecting it to take another 10 days or so to get the cars out.

Ship with second car moored at Abidjan Port

Baseline prices

Before any import restrictions are enacted (if they will be at all – it’s not written in stone yet), I thought it would be interesting to do a comparison of second hand car prices in the Ivory Coast vs Western Europe.

The largest used car sites I’ve found in the Ivory Coast are and For Europe Im using the  pan-European site For each combination of model, year and fuel type there is usually one or a couple of cars on the Ivorian sites and several hundred on, so I’ll be using the average asking price on the Ivorian sites, and median asking price from

Toyota Corollas, asking prices as of 18/03/2012:

Fuel     |  Year |  I. Coast Price  | I. Coast Price | Europe Price

Diesel | 1990 | 1.8M F CFA        | 2,744 EUR      |     990 EUR
Petrol | 1992 | 2.8M F CFA        | 4,268 EUR      |   1,350 EUR
Petrol | 1995 | 2.8M F CFA        | 4,268 EUR      |   1,450 EUR
Petrol | 1996 | 4.0M F CFA        | 6,098 EUR      |    1,550 EUR
Diesel | 1997 | 4.5M F CFA*      | 6,860 EUR      |    1,825 EUR
Diesel | 1998 | 3.0M F CFA        | 4,573 EUR      |   2,300 EUR
Petrol | 1998 | 2.99M F CFA       | 4,558 EUR      |  2,290 EUR
Petrol | 2000 | 3.8M F CFA         | 5,793 EUR      |  2,699 EUR
Diesel | 2001 | 4.1M F CFA*      | 6,250 EUR      |  2,500 EUR
Petrol | 2002 | 4.5M F CFA        | 6,859 EUR      |  5,690 EUR
Petrol | 2003 | 6.0M F CFA        | 9,146 EUR      |  6,250 EUR
Petrol | 2007 | 7.0M F CFA        | 10,671 EUR    | 12,450 EUR
Petrol | 2009 | 7.68M F CFA      | 11,707 EUR    | 14,800 EUR

Cars marked with * are diesels with 4 doors and thus suitable for taxi use, something that I believe warrants a premium in the Ivory Coast.  An exception could be for the 2000 and 2001 models which have Peugeot engines as the Toyota engines didn’t meet EU emission regulations.  The Toyotas Im sending happen to have Peugeot engines – I wasn’t quite aware of this issue when I bought them (another rookie mistake).  I have heard that Peugeot engines don’t last as long (2 years or so) for taxi use in Abidjan, but I shall see.

There is a big premium on cars in the Ivory Coast as expected, and it’s mainly due to import duties. The surprise here is that for newer cars there seem to be  a discount in the Ivory Coast. Not quite sure why this is, and if there really is a discount – it’s only based on a handful of datapoints.  The set of people who deal with very new cars are a wealthy small minority. Maybe asymmetrical information comes into play, if you are selling a relatively new car that you have imported recently to Abidjan, there’s got to be something wrong with it.

Let’s look at another popular car in Abidjan:

Toyota RAV4, asking prices as of 18/03/2012:

Year |  I. Coast Price  | I. Coast Price | Europe Price

1993 | 3.5M F CFA        | 5,335 EUR      |     None
1995 | 4.0M F CFA        | 6,098 EUR      |     3,490 EUR
1996 | 4.05M F CFA      | 6,174 EUR      |     3,500 EUR
2001 | 7.0M F CFA        | 10,671 EUR    |     7,450 EUR
2002 | 6.85M F CFA      | 10,442 EUR    |     7,945 EUR
2004 | 6.1M F CFA        | 9,299 EUR        |     9,900 EUR
2006 | 13M F CFA          | 19,817 EUR    |     14,900 EUR
2008 | 12.5M F CFA      | 19,207 EUR    |   17,990 EUR
2010 | 18M F CFA          | 27,439 EUR    |     24,000 EUR

Ok, here the Ivory Coast premium includes the newest cars. It could be a fluke for the Corollas.

Time for some Afro-optimism

The Remarkable Part of the Chicken Republic Story

Regarding Nigerian entrepreneur Deji Akinjanju’s story two posts ago, there quite a few things that hit home and/or are signs of the time, like that he was about my age when he started, that he did consulting work in London (which I’ve also done), that he believes strongly in investing in Africa, and that he left a good paying job in Western Europe to become an entrepreneur in West Africa.

However, the most remarkable thing about Akinjanju’s story is that something like this didn’t happen:

Part of Uzbekistan is also ideal for growing tea. Interspan, a US company, invested heavily. But by 2006, Karimov’s daughter, Harvard graduate and international jet setter, Gulnora Karimova, had taken an interest in this market. Gulnora is a woman of many talents as you can see from her webpage:

For example she hangs out with rock stars like Sting and even duets with Julio Iglesias:

Gulnora’s interest meant taking over Interspan’s assets and business. And this was not going to be by making an attractive offer. The company reports that men with machine guns, allegedly working for the Uzbek intelligence services, entered its offices and warehouses, and seized its assets and inventory. Its personnel were arrested and tortured. By August 2006, the company pulled out of Uzbekistan, and tea was now a Karimov family monopoly.


Or something like this, from the bad (hopefully/probably) old days in the Ivory Coast:

Washington, DC 27 October 2003 — The American owners of a cellular telephone operator in Côte d’Ivoire that was shut down earlier this month are preparing a claim for damages. They charge the Ivorian government with failing to protect their investment.

The expropriation claim is being prepared by lawyers for Western Wireless, a Bellevue, Washington-based communications services provider, and Modern Africa, a $110 million fund with investments in nine African-based companies. Together, Western Wireless and Modern Africa report they have invested about $40 million in the mobile phone firm, known as Cora de Comstar.

On Friday the Bush administration weighed in with diplomatic backing for the American firms. Assistant Secretary of Commerce William H. Lash, III delivered what he termed “a very harsh demarche” to an official of the Ivorian embassy in Washington.

“This is the worst treatment of an investor and the worst example of state-sponsored thuggery I have seen anywhere,” Lash said he told the Ivorian official summoned to the Commerce Department, standing in for Ambassador Youssoufou Damba, who was recalled to Abidjan last week for consultations. He said the treatment of Cora de Comstar could turn Cote d’Ivoire into a “poster child” for negative investment climates.


Although a legal dispute over ownership of Cora de Comstar has been brewing for more than two years, the current crisis was prompted by the takeover of the company’s offices on October 9 by Alexander Galley, accompanied by 25 policemen who forcibly evicted the company’s management and staff, according to the U.S. owners. They said Galley based his action on a decision by an Ivorian judge, whose order was subsequently cancelled by the Ivorian Supreme Court.


According to Brad Horwitz, president of Western Wireless International, the government of President Laurent Gbagbo is to blame for what has happened to the cellular company. “The government clearly had a choice to make: it could deal with a convicted criminal or it could protect a U.S. investment,” he said. “We have given them numerous opportunities,” adding that negotiations on the matter have dragged on for more than two years.

For the past several months, the investors operated Cora de Comstar on a cash basis, because a court had handed control over company bank accounts to Galley. But after the October 9 incursion, they shut the network down, cutting off service to some 33,000 customers, Horwitz said: “We have furloughed 200 employees. We have lost all revenues. Our offices have been systematically looted and trashed, safes wrenched out of the walls and stolen, all this with the complicity of the government. It comes to a point where enough is enough.”


Pretty Cool

For most African states (and some central Asian ones too) that’s how it’s been most of the time since independence. You have had, and I quote from the excellent   “extractive economic institutions — economic institutions designed to extract resources from the population and businesses for the benefit of a narrow elite.”  

But it’s actually looking like it’s changing now – in West Africa at least (Im not sure about Central Asia) – and that’s pretty cool.

Imagining Dominique Ouattara using thugs to steal one’s business in the Ivory Coast feels just as surreal as imagining Filippa Reinfeldt (spouse of Sweden’s Prime Minister) doing it in Sweden.  On the other hand I could maybe imagine the son of Senegal’s President Karim Wade taking over other people’s businesses, but it looks like the good people of Senegal are removing Karim from any position of power now.

Filippa with NY Rangers legendary goalkeeper Henrik Lundqvist. Ice-hockey players are probably ok, but If Filippa starts hanging out with Sting or Julio Iglesias I would start to worry.

Social Capital and Trust

Ending up with Prosperity?

I used to hold the view that if you take any nation-sized group of people and let them be governed by a reasonable political leadership that promotes rule of law, property rights, makes sensible investments with public funds (in areas such as education and infrastructure), upholds a liberal market based economic system, and fights corruption – then you are going to end up with prosperity after a while.

P’J O’Rourke has a good take how the choice of political/economic system trumps which people it’s applied on in “Give War a Chance“:

Personally I missed the old East Berlin. The only thing East Germany ever had going for it was a dramatic and sinister film noir atmosphere. When you passed through Checkpoint Charlie the movie footage seemed to switch to black and white. Steam rose from man-hole covers. Newspapers blew down wet, empty streets. You’d turn your trench coat collar up, hum a few bars of “Lili Marleen” and say to yourself, “This is me in East Berlin.”

That’s gone now and the place is revealed for what it’s really been all along, just a screwed-up poor country with a dictatorship. The dictatorship part is understandable, but how the Commies managed to make a poor country out of a nation full of Germans is a mystery. The huge demonstrations that had shaken East Germany for the past several months had one characteristic which distinguished them from all other huge demonstrations in history—they never began until after work. I went to one of these at Humboldt University. The students were demanding economics courses. It was hard to reconcile this with my own memories of student protest. We were demanding free dope for life.

However, a dozen years or so ago, I read “Make Democracy Work – Civic Traditions in Modern Italy” by Robert Putnam:

Putnam evaluates the institutional performance of twenty Italian regional governments using surveys, interviews and a diverse set of policy indicators. His central finding is that wide variations in the performance of these governments are closely related to the vibrancy of associational life in each region. In northern Italy, where citizens participate actively in sports clubs, literary guilds, service groups and choral societies, regional governments are “efficient in their internal operation, creative in their policy initiatives and effective in implementing those initiatives.”

In southern Italy, by contrast, where patterns of civic engagement are far weaker, regional governments tend to be corrupt and inefficient. Putnam explains this relationship between strong networks of citizen participation and positive institutional performance in terms of “social capital” — the networks, norms of reciprocity and trust that are fostered among the members of community associations by virtue of their experience of social interaction and cooperation.

It’s very hard to dismiss, it’s the same country, same law, same national government, same economic system, and yet two clearly different outcomes in northern and southern Italy.  Putnam has tons of empirical data of associational life and other indicators linked to the somewhat fluffy concept of social capital, and they all show a striking difference between northern and southern Italy.

It managed to convince me at least, that while economic system and policies matter greatly for prosperity, there are other less tangible factors linked to people / culture / trust / social capital that are also important.


In “Trust” Francis Fukuyama discusses trust and social capital:

Trust is the expectation that arises within a community of regular, honest, and cooperative behaviour, based on commonly shared norms, on the part of other members of that community. Those norms can be about “deep value” questions like the nature of God or justice, but they also encompass secular norms like professional norms and codes of behaviour. That is, we trust the doctor not to do us deliberate injury because we expect him to live by the Hippocratic oath and the standards of the medical profession.

Social capital is a capability that arises from the prevalence of trust in a society or in certain parts of it. It can be embodied in the smallest and most basic social group, the family, as well as the largest of all groups, the nation, and all other groups in between.

[Social Capital] cannot be acquired, as in the case of other forms of human capital, through a rational investment decision. That is, an individual can decide to “invest” in conventional human capital like a college education, or training to become a machinist or computer programmer, simply by going to the appropriate school. Acquisition of human capital, by contrast, requires habituation to the moral norms of a community and, in this context, the acquisition of virtues like loyalty, honesty and dependability. The group, moreover, has to adopt common norms as a whole before trust can become generalized among its members.

The most useful kind of social capital is often not the ability to work under the authority of a community or group, but the capacity to form new association and to cooperate within the terms of reference they establish.


For example, in the Chinese parts of East Asia and in much of Latin America, social capital resides largely in families and a rather narrow circle of personal friends.

It is difficult for people to trust those outside of these narrow circles. Strangers fall into a different category than kin; a lower standard of moral behaviour applies when one becomes, for example, a public official. This provides cultural reinforcement for corruption: in such societies, one feels entitled to steal on behalf of one’s family. Corruption, of course, has many causes including, most importantly, the design of public institutions. But even well designed institutions will fail to function properly if the officials and political leaders at the top of judicial hierarchies themselves lack the proper norms of personal behaviour.

Still bullish on the Ivory Coast

I believe the Ivory Coast and most of Africa also are places where social capital largely resides in families, or rather extended families, and where levels of social capital are low overall.  I ‘d say the Ivory Coast’s president Alassane Ouattara’s greatest challenge, is not the security situation,  not how to  deal with Gbagbo supporters, and not how to keep together the PDCI – RDR alliance, but how to deal with the hurdles created by low social capital.

It’s also a major challenge for anyone doing business in the Ivory Coast.   I think it’s not uncommon that trust doesn’t extend much past an Ivorian’s extended family.  Business is done with outsiders, but on a lower level of trust as – not without reason –  deceit is expected from outsiders.    It becomes more difficult (but not impossible) for corporations to grow in such circumstances, as it inevitably involves hiring and working with strangers.

Nevertheless, there are many examples of fast economic growth and flourishing businesses in a low social capital / low trust environment. It’s being well aware of the social capital issue that I’m bullish on the Ivory Coast.

Social capital is after all only one out several important factors for prosperity, and the causality isn’t clear between them. Is low social capital causing dysfunctional institutions and bad governance, or is there an arrow the other way too? What if the Ivory Coast manages to have – by African standards – very good institutions but still low social capital, would that negate negative effects of low social capital?  And exactly how does the Ivory Coast stand in terms of social capital compared to the rest of Africa, and is it changing to the better?  Guess there is no consensus on how to measure it,  and I doubt anybody has tried to measure it in the Ivory Coast, so nobody knows.

Top Guy Syndrome explained

Fukuyama on the advantages of social capital:

The economic function of social capital is to reduce the transaction costs associated with formal co-ordination mechanisms like contracts, hierarchies, bureaucratic rules, and the like. It is of course possible to achieve co-ordinated action among a group of people possessing no social capital, but this would presumably entail additional transaction costs of monitoring, negotiating, litigating, and enforcing formal agreements.

No contract can possibly specify every contingency that may arise between the parties; most presuppose a certain amount of goodwill that prevents the parties from taking advantage of unforeseen loopholes. Contracts that do seek to try to specify all contingencies—like the job-control labour pacts negotiated in the car industry that were as thick as telephone books—end up being in exible and costly to enforce.

Even in non-hi-tech environments, social capital often leads to greater efficiency than do purely formal co-ordination techniques. Classical Taylorism, which organised workplaces in a highly centralised, bureaucratised manner, created many inefficiencies as decisions were delayed and information distorted while moving up and down hierarchical chains of command.

In many manufacturing facilities, Taylorism has been replaced by much  flatter management structures which in effect push responsibility down to the factory  floor itself. Workers who are much closer to the sources of local knowledge are authorized to make decisions on their own, rather than referring them up a managerial hierarchy. This often leads to great gains in efficiency, but is totally dependent on the social capital of the workforce. If there is distrust between workers and managers, or widespread opportunism, then the delegation of authority required in a typical ‘lean’ manufacturing system will lead to instant paralysis.

This is in effect what happened to General Motors during the strikes of 1996 and 1998, when a single dissident local (angry, in the Ž first instance, over the outsourcing of brake parts) was able to shut down the company’s entire North American operations.

Ah, it looks like the Top Guy syndrome just got explained; to delegate one needs some social capital to avoid paralysis.

Fukuyama on the downsides of low social capital:

Low levels of social capital lead to a number of political dysfunctions, which have been extensively documented. Following Tocqueville’s analysis of France, many observers have noted how administrative centralisation has led to an excessively rigid and unresponsive political system, one that can be changed only through anti-systemic upsurges such as the evenements of 1968.

Low levels of social capital have been linked to inefficient local government in southern Italy, as well as to the region’s pervasive corruption. In many Latin American societies, a narrow radius of trust produces a two-tier moral system, with good behaviour reserved for family and personal friends, and a decidedly lower standard of behaviour in the public sphere. This serves as a cultural foundation for corruption, which is often regarded as a legitimate way of looking after one’s family.

Avoiding Fraud

Rule #1: Don’t Lose Money   Rule #2: Don’t Forget Rule No #1

I think the no 1 reason for small scale  investments in Africa made by people living outside Africa to fail, isn’t poor infrastructure, political risks or red tape, but dishonesty on the side of the person managing things locally in Africa.

I’ve heard many stories of people getting ripped off by their partner in Africa. And it isn’t primarily a story of Africans fooling naive European investors. Most people that I know that invest like me in Africa, are Africans living in Europe, and most of them let family members manage their investments, but even then things can, and do go wrong.  When talking business with Africans in the diaspora, how to avoid your local partner taking your investment for his own benefit is always a major topic, and everybody seem to have stories of (extended) family members being dishonest with them.

I actually tried to tackle the issue of  how this problem can be so prevalent  in one of my first posts called The Issue of Trust.

Some specific advice

Regarding how to avoid fraud, here are a few ideas:

  • Don’t entrust all your investments to a single person. It’s not only about not having all eggs in the same basket. With a smaller size of the investment the risk/reward equation for dishonesty gets better.
  • Go to Africa often and check on your investments. Many Africans living abroad don’t go back for decades – and that makes the risk of behaving badly diminish for the local partner.
  • Minimize envy – this is what Africans in the diaspora have told me about handling family members –  don’t let them know about all your investments, only the ones they manage, and pay them decently. Seeing that your half-brother living in Europe is very successful while you are not, and handling his money, makes for a dangerous combination.
  • Divide up the investment in small amounts.  One big amount increases the temptation for dishonesty.
  • Require the local partner to transfer profits to you frequently. I have an Ivorian bank account where those that manage my investments can deposit cash, and I can check on the account through online banking.
  • Work with a law firm that can act directly on the ground if there is a problem. A big part of the fraud problem are weak legal systems across Africa combined with norms that include some toleration of white collar crime. With the new government in the Ivory Coast my trust in the Ivorian legal system has improved, and think there is a similar effect on ordinary Ivorians.  People know that laws matter more than before, and if you are dealing with someone who has a law firm working for them, being dishonest is taking a great risk.
  • Have contracts and keep things in the formal sector.  Otherwise the benefits of there being a reasonably functioning legal system aren’t very big. That’s given that there is a reasonably functioning legal system of course – in some places one might be better off in the informal sector.
  • Conduct very careful selection of partners where honesty and integrity is a key criteria. Having known someone for a long time so a track record is built up  is the best way I know to judge a man’s (or woman’s) integrity. Apparently there are some studies showing that the width of a man’s face matters for trustworthiness, which is interesting but I’m not sure if it’s very useful.
  • Choose partners that already have an income or some wealth. Incentives to be fraudulent for someone who has nothing are much stronger than for other people.
  • As Ronald Reagan said: “Trust but verify”.  I have someone who independently checks – in a friendly way – on the work of those who manages the investments.

Yes, it has happened to me

Since I started investing in the Ivory Coast I have been the victim of fraud twice, in both cases due to dishonest workers on the Cocody house. One builder that stole building material, and this year a carpenter that took an advance but didn’t do any work.  Fortunately none of it had any major impact on investments, but it’s two good reminders to be careful.

Rubber Trees

Waiting for trees to grow

The last few times I’ve been in the Ivory Coast I’ve heard a lot of talk of hevea or rubber tree plantations.  Since early 2000s, among well-off Ivorians there seems to be a trend to invest in rubber trees. I considered joining in, but never did for the following reasons:

  • It takes up to 7 years from planting a tree until one can start getting rubber from it.  While I like long term thinking and investing, I figured I would be in a better position after seven years investing, and re-investing profits from something else like taxis or real estate.
  • I thought synthetic rubber would squeeze out the use of natural rubber over time.
  • I like to invest in something linked to the growth of the Ivorian economy – on which I’m quite bullish. Selling stuff to the growing African middle class seems to be the right place to be.  Global demand for rubber has nothing to do with the Ivory Coast, and all to do with the developed world’s and China’s industrial demand for it.
  • Ivory Coast’s and Africa’s exports are already dominated by raw materials. It would feel better to do something with a little more value added.

“I sure as hell wouldn’t want to be in a 747 about to land on synthetic tires”

However, I’ve read a bit about natural rubber and started to re-think some of the above.

Apparently there are plenty of uses where natural rubber is better suited than synthetic rubber – and it’s not looking like it will change.  In fact, according to, the share of natural rubber of total world rubber production has gone up from 41.6% 1998 to 46% 2008, and is projected to increase further.

Despite the brilliance of industrial chemists, there is still no synthetic able to match natural rubber’s resistance to fatigue and vibration. Natural rubber still claims more than 40% of the market, a figure that has been slowly rising. Only medical rubber can be steam cleaned in a medical sterilizer, then thrust into a freezer – and still adhere flexibility to glass and steel. Big airplane and truck tires are almost entirely natural rubber; radial tires use natural rubber in their sidewalls, whereas the earlier bias-ply tires were entirely synthetic. High-tech manufacturers and utilities use high-performance natural rubber hoses, gaskets and O-rings. So do condom manufacturers.
“I sure as hell wouldn’t want to be in a 747 about to land on synthetic tires” the director of the U.S. National Defense Stockpile Center has said.

From the excellent book “1493” by Charles Mann, part of my post-Christmas reading

As to having to wait 7 years to get any returns, my problem with that was that the initial investment could be better put elsewhere.  Now, I have learned that a typical small scale rubber tree plantation deal in the Ivory Coast doesn’t have much of an upfront cost. It works like this; a village that owns land but doesn’t have the funds to cultivate it, allows an investor to plant and maintain rubber trees, and then the profits are typically split 25% to the village and 75% to the investor.  Planting the trees doesn’t cost much, and the invested funds mainly go to pay the  upkeep during the 7 years, paid monthly.

Rubber trees in the Ivory Coast

A plantation that has grown for a couple of years can of course be bought or sold, so nobody really has to wait 7 years. However, there are a lot of things that can go wrong in these type of deals, and if I ever invest in a rubber tree plantation, I’ll probably start from scratch.

My remaining concerns about rubber tree investments still stand though. Natural rubber is a curious product, being agriculturally produced but used industrially.   Demand for it is much more correlated to stuff like iron ore or copper than other agricultural products like wheat, soy-beans or apples.  And here lies a problem, since I have a gloomy outlook on the industrialised world’s economic prospects and believe China will see a real estate crash. Demand from China has been a big factor in driving up industrial commodity prices over the last decade and I don’t think this demand is sustainable.

Also, the 7 year lag of rubber, makes long term forecasting and planning important – and that’s not always something humans excel in.   I have a feeling a lot of rubber trees are planted when prices are high, thus contributing to reducing prices 7 years later.

It seems like major new plantations were started in Asia in 2006-2007:

On the supply front, natural rubber trees were planted in large scale in both 2006 and 2007. Once planted, it takes approximately 6 to 7 years for rubber trees to begin producing sap. Supply is therefore inelastic in the short–term and will be limited until 2013. It is estimated that newly planted acreage of natural rubber trees totals in excess of 1 million hectares. According to the International Rubber Study Group (IRSG), global natural rubber output is expected to total 10.83 mm tons, (up approximately 5% year-over-year). Although helpful in the short-term, long-term supply will not increase markedly until 2013.


So it looks like increased supply could coincide with decreased demand in 2013-2014 – and it’s not difficult to see what that would do to natural rubber prices.

The coolness factor

On the other hand 2013-2014 could be a good time to start a plantation, and one never know what will happen. And I got to admit that I would enjoy being able to say that I own a rubber tree plantation.

Rubber trees originally come from the Amazon in Brazil but due to leaf blight plantations in the whole of Latin America don’t work out too well. Instead, 90% of the world production of natural rubber comes from Asia (and 2% from the Ivory Coast), and if leaf blight were to hit Asia things would change dramatically.

Natural rubber price since 1981

Top Guy


I’ve always found it weird to be dealing with organisations that are highly hierarchical. When ideas or proposals are judged more on the status within the organisation of the person proposing them, than on their own merit, something’s got to be fundamentally wrong. I guess it’s near impossible to do away with hierarchy altogether, but in any knowledge-based organisation I think it would make sense to de-emphasise hierarchical differences.

There’s tons of research around these things, but Im going to go with a quote from Stanford Professor Robert Sutton  commenting on why Google probably is a worthy No1 on Fortune’s best place to work list:

Google does not unduly emphasize status differences among people at different levels or within in the same level.  If you watch how people interact there — receptionists and executives, young engineers and senior executives, and people from less prestigious versus more prestigious parts of the company — the more powerful people treat the less powerful people with an unusually large amount of respect, even deference, and the less powerful people don’t cower or kiss-up nearly as much as I see in most places.   Yes, Googlers are sometimes guilty of being arrogant when it comes to outsiders (although I see signs of modesty creeping in), but I have to give Larry and Serge credit for creating such norms mutual respect from the start and building an organization that appears to have sustained them.

Still, despite all advantages of taking it easy with hierarchy, finding organisations that operate in an opposite way of Google is not difficult. Starting in Sweden one doesn’t need to go very far south to find places where highly hierarchical organisations seems to be the norm – I’d put Germany and France in this camp, as well as the Ivory Coast.

The boss is abroad, sorry, we can’t do anything to help you

One thing I’ve encountered many times in West Africa in both the public and private sector – and found equally frustrating each time – is that you got an organisation where only the top guy can take initiatives and decisions.  Anybody else in the organisation isn’t authorised to take decisions on even the smallest details so things can get done. So you have to get in contact with the top guy who is often very busy and hard to reach, and sometimes expects you to wait for hours to get an audience.

Here is a story I found in the Ivorian newspaper “Le Democrate” yesterday about importing cars that appears to be a straight forward example of the top guy phenomenon:

Le 2GE (Groupement de gestion des entreprises) chargées de confectionner les plaques d’immatriculation et de tatouer les vitres des véhicules automobiles manque de tôles. C’est l’amer constat que les importateurs dénoncent au guichet unique, depuis hier. Pour les usagers cette déconvenue entraîne un blocage du système de fonctionnement du guichet unique. Pis, les importateurs et transitaires dénoncent l’absence d’interlocuteurs capable d’apporter les solutions à leurs problèmes. Et pour cause, le directeur général de cette structure, Niamoutié Kouao est absent de la Côte d’Ivoire depuis un mois. Toute chose qui fait dire aux importateurs que l’Etat gagnerait à mieux définir la convention de concession qui le lie au 2GE, et par ricochet toutes les structures sous la direction de Niamoutié Kouao. Nos tentatives pour avoir la version de la direction sont restées sans suite. Cependant, nos colonnes restent ouvertes pour mieux éclairer l’opinion sur autre affaire.

Quick and shortened translation with the help of Google translate:

[2GE, the firm that makes the license plates for Ivorian cars has run out of sheet metal. Since yesterday, importers note bitterly that the whole import process has grind to a halt.  Worse, importers and freight forwarders denounce the lack of partners capable of providing solutions to their problems. And for good reason, as the General Manager of 2GE, Niamoutié Kouao has been absent from the Ivory Coast for the last month. Our attempts to get the version of the management were not responded to.]

I wonder how deeply entrenched the top guy phenomenon is. Could it possibly start changing if you have succesful companies operating more like Google making a mark on the Ivorian market? How does for example MTN’s corporate culture look like?

Like a Slow River

Then of course to be successful business-wise in a different culture than your own, you got to adapt.  You could see the top guy phenomenon as a competitive advantage of foreign firms that are aware of it, relative to those that act as if things are the same as on their home market.

“The slow pace of doing business in a country like Nigeria is often a source of much frustration for South Africans. I will tell you one little thing about doing business in Nigeria: time is like a slow river. If you can grasp this mindset and learn to manage it, you will do well in Africa.”

–  Nissi Ekpott, Nigerian entrepreneur based in South Africa, from the altogether interesting article Business culture in SA different than in rest of continent, says entrepreneur in How We Made It in Africa

Guess this Ekpott guy is right, there are frustrations but you got to live with them – almost embrace them – and it’s worth it as the opportunities are far greater than the frustrations.

Along the same line:

“This is the place to be . . . with all its challenges. Let’s go and work hard. I know there are hurdles and [conditions in Africa] are not every day the way we would like it to be, but look through that [and] see the opportunities because they are ample.”

– Johan van Deventer, MD, Freshmark (South Africa)

Import limits on used cars

I’m saying it again: Come on Ouattara, don’t disappoint now!

There’s been a lot of good news and propositions coming out of the Ivorian government, but think I’ve just found a bad one.  And it’s something that affects my business:  It seems the Ivorian government intends to introduce a ban on importing used cars older than a certain age.  The government seems to be aiming to set the limit to 5 years whereas the transport industry wants it raised to at least 10 years.

Quite a lot of West African countries have these kind of restrictions, from a quick surf I see:

Senegal – 5 years since 2003

Guinea – 5 years since 2011 

Ghana – No limit but penalty fees for cars older than 10 years (just like in the Ivory Coast right now)

Nigeria – 15 years (according to the Import prohibition list of the Nigeria customs) It seems that they started with a 5 year limit in 2001 and then progressively increased it.

The case for a restriction

The thinking behind these restrictions seems to be:

  • National pride – not wanting their country to be a dumping ground for old cars from the developed world
  • Aesthetics – a wish to make their country look better with more new cars on the roads
  • Environment – old cars pollute more
  • Congestion – with less cars imported, congestion on the roads could be mitigated

and maybe:

  • Protectionism – even if there is no domestic car industry, the limit could be an attempt to promote one or at least promote domestic assembly of car parts

The case against

And here’s why I still think these import restrictions don’t make much sense:

  • Cars up to 5 years old are expensive – a vast majority of Ivorian citizens can not afford them. A small elite that can afford new cars (and don’t use taxis) won’t be affected, but transport costs for everybody else will increase, thus increasing poverty, and reducing mobility and business activity.
  • Public transport in Abidjan is very limited, and has to a large degree been replaced by Woro-Woros (Taxis taking multiple passengers on a hop-on hop-off basis along a set route).  With a 5 year limit, the return on importing a Woro-woro is so low that it doesn’t make economic sense to import cars to make Woro-Woros. So that would mean game over on expanding my taxi business in it’s current form. Also, transport costs would go up as the supply of Woro-Woros grind to a halt making basic transportation unaffordable for some Abidjan residents.
  • But prices won’t go up so much so it makes sense to import 5 year old cars, due to the existing car park.  A limit actually causes old wrecks to be more valuable, so everybody will keep patching up the existing cars as long as possible. Contrary to the intention of the import restriction, the car park is likely to get older, nullifying any pride, aesthetic, or environmental benefits. You kind of get a Cuba situation (though Cuba happened to have quite beautiful cars prior to Castros revolution).
  • The elite that can afford new cars aren’t likely to buy many small Toyotas, so there won’t be a trickle down of cheaper cars suitable for taxi service.
  • It will create incentives for smugglers and for corruption of custom officers.
  • Government revenue through import duties will go down  as fewer cars will be imported – and as mentioned in the Customs post import duties is a very important part of government revenue.  Admittedly though,  the Ivorian government is also proposing to reduce import duties which I think is a good thing, but does contributes to reduce revenue.

All in all it’s a bit like a tax that – like all taxes – has a negative effect on people that pay it (in this case ordinary Ivorians paying for transport) but that instead of increasing revenue to the government does the opposite.  The only positive thing I can see is that it’s likely to mitigate the trend of increasing congestion in Abidjan a bit.

Senegal has had a strictly imposed 5 year limit for quite a while now. Here are some of the reactions to it I’ve picked up on Senegalese Internet forums:  [Sorry about the French, too tired to translate now]

Voila un système qui en fait provoque le contraire de ce qui est prévu. Qui au Sénégal a les moyens de se payer une voiture de moins de 5 ans? Qui ? Une certaine élite voila. Donc le résultat est que en fait les propriétaires de vielles bagnoles continuent de les rafistoler étant donné qu’ils n’ont pas les moyens de s’en acheter une autre et c’est en fait cela qui contribue à donner cette image de parc automobile poubelle.

Avec cette loi, la moindre poubelle vaut une fortune. Le Sénégal est le  pays d’Afrique de l’ouest où le parc auto est en aussi mauvais état

la seule motivation etait que Wade veut prèserver ses actions et celles de sa famille dans l’usine de montage à thies vos appreciations sont fausses vous confondez le confort de vos gros cylindre avec les vèhicules morgue roulante sur nos routes.le renouvellement de notre parc automobile se fait à deux niveaux, les riches et voleurs, ils n’ont pas de problème car l’augmentation des voitures neuves ne concerne que la minoritè riche de la societè mais fait un tour dans nos garages et l’interieur ,tu te rendras compte qu’il y’a un apprauvissement de notre parc automobile

le renouvellemt de nos vehicules ne se fera jamais de l’interieur seulement 5% des senegalais ont les moyens de par leur revenus de se tapper un vèhicule neuf et autre echec les accidents deviennent de plus en plus cruels

vous parlez de cette mesure de limitation des voitures importèes, pour moi c’est une grande BETISE, le senegal ne fabrique pas voiture, et ces dernieres coutent maintenant tres chères là bas, essayez de prendre un taxi 90% des taxis,une fois dedans tu pries pour arriver chez toi sans problème

Paved roads

Islands of paved roads

One thing I noticed last time in Abidjan was that there are plenty of areas of the city that are like islands of paved roads that can’t be reached with paved roads. One would think that main connecting roads would be paved first, but what I think is happening is that a private sector developer buys a specific area and builds both houses and roads there.  Then it is the government’s responsibility to sort out connecting roads, and well, the Ivorian government hasn’t been very good at that over the last ten years.

Paving roads should be in a government’s interest though, it not only makes life easier for citizens and reduces transport costs for the private sector, but is also apparently a key factor in people’s perception of government. Here are results from a Mexican study I found via

Families living along streets that were treated with pavement were 0.304 points more satisfied with the local government than those in the control group (on a 4-point scale).

Satisfaction with the State and Federal government also increased significantly, by 0.168 and 0.140 points. In other words, the direct effect of the local policy is about twice as large as the indirect effects.

…the indirect effect does not occur along party lines, but reflects a generalized improved perception for all other branches of government.

Finally… the return for the implementing politician in terms of vote share is 7 percentage points (20% increase in share) if an unpaved electoral section gets fully paved under the politician’s watch.

My Cocody house is actually in a paved road island area.  I was going there with some prospective tenants on a rough unpaved road and they asked if there was any other way to reach the house.  I had to tell them that yes, there are other paths, but unfortunately they aren’t paved either.

Building roads and bridges

On the other hand, the good news is that the Ouattara government is doing progress in paving and building roads. And when roads get paved real estate values increase.

An unpaved road in central Abidjan with a road-building machine on it

The worst thing with unpaved roads is when there are heavy rains – and that’s a frequent occurrence in Abidjan. Roads then often become impassable or force speeds  to be reduced to crawling, virtually shutting down whole sections of the city. Here’s how it looks, same street as above:

4x4s sell rather well in Abidjan

Speaking of infrastructure, I recently saw a video of the planned construction of the so called 3rd bridge of Abidjan crossing the lagoon, and the connecting highway ramp/roundabout at Riviera II.  I hadn’t quite realised how long the bridge would be – 2 km, and over three times the length of any of the existing bridges.   The thing with the bridge project is that it was planned something like 15 years ago, but then nothing happened.  One of Gbagbo’s aides even built a house on the mouth of the bridge. Now the house has to be demolished and there is a bit of of brouhaha over that.

Anyhow, here’s the video:

Our current release schedule does not include the Ivory Coast

A typical release is planned many months in advance,  and regrettably, your planet is one of those scheduled for demolition

On the online banking website of the bank where Im a customer, you can send money to Burkina Faso, Togo and even to “US Minor Outlaying Islands” which according to Wikipedia have no permanent residents. However, you cannot send money to the Ivory Coast.

In March 2010 I asked them about it and got the following answer:

Apologies for the delay in coming back to you on your query. I have investigated this with our International Payments area and have been advised that currently there are EU and US sanction in place against Ivory Coast. Until such time as these sanctions are relaxed there will be no option to make a payment to this country using Internet Banking.

Since the sanctions are gone, but the Ivory Coast is still not on the drop down menu for international payments I emailed them last week and got the following response:

Dear Martin,

Thank you for your email. I acknowledge that currently the Internet Banking website does not offer the International Payment facility to the Ivory Coast.

I assure you that we endeavour to meet the needs of our customers and continually benchmark our product offering against our competitors. We operate a scheduled release system for updating Internet Banking. A typical release is planned many months in advance, unfortunately our current release schedule does not include the addition of the Ivory Coast for International Payments.

However, thank you for your feedback. We have taken note of  your suggestion and will submit it for inclusion in our future Release Plans.

Yup, that’s a lovely bureaucratic answer. My local bank is clearly not owned by Richard Branson, and  I can start seeing where Douglas Adams got inspiration for the Vogons in the Hitch Hiker’s Guide to the Galaxy:

People of Earth, your attention, please. This is Prostetnic Vogon Jeltz of the Galactic Hyperspace Planning Council. As you will no doubt be aware, the plans for development of the outlying regions of the Galaxy require the building of a hyperspatial express route through your star system. And regrettably, your planet is one of those scheduled for demolition. The process will take slightly less than two of your Earth minutes. Thank you.

There’s no point in acting surprised about it. All the planning charts and demolition orders have been on display at your local planning department in Alpha Centauri for 50 of your Earth years, so you’ve had plenty of time to lodge any formal complaint and it’s far too late to start making a fuss about it now. … What do you mean you’ve never been to Alpha Centauri? Oh, for heaven’s sake, mankind, it’s only four light years away, you know. I’m sorry, but if you can’t be bothered to take an interest in local affairs, that’s your own lookout. Energize the demolition beams.

Encouraging signs

Preliminary performance check

In the The ball is in your camp President Ouattara! post published the 11 April 2011 I outlined my expectations for the new government. The last point was an improvement for the Ivory Coast in international rankings of governance, produced by the likes of Transparency International, Freedom House and Heritage Foundation.

These rankings are probably the easiest way to gauge how the Ivorian government is doing, but they are a lagging indicator and I don’t think any of them have yet been published for a time period after Gbagbo’s fall.

So to check the Ouattara government performance – principally that they are not too corrupt – one has to look at datapoints here and there from what they have actually done.  So, here are a few encouraging things I’ve seen so far:

  • Infrastructure projects: A surprising amount has actually been achieved, roads have been built and paved, potholes fixed, new bridges built, construction started on a few big projects. And this is a very good indicator. With high corruption it’s difficult to get much done, because everything will cost a lot more, and result in infighting about who gets which bribe. Then there is the not so uncommon case where nothing gets done and all the money ends up in the pockets of the responsible politicians.
Opening ceremony for a bridge in Cocody
  • This is anecdotal evidence, but I’ve heard that a top level employee of a large international organisation, upon arriving to the Ivory Coast, said he’d never seen an African government work this hard.
  • Reduction of staff at the national television RTI and Air Ivoire, both badly run overstaffed companies where hiring had been far from meritocratic.
  • Reduction of checkpoints to officially 33 nationally. There are still illegal checkpoints, but at least in Abidjan the situation is better than in many years.
  • In the budget for 2012 there are more funds put aside for investments than in the last 3 to 4 decades (according to the responsible minister – haven’t checked myself)

In European media, when you hear about the Ivory Coast, beside Gbagbo going to the Hague, it’s usually about the limited bouts of violence that have happened.  I kind of think that stuff like the above is more significant and more important for the future.

Stealing It

Stories like the above are essentially about corruption, or how people with power use it to steal wealth produced by others – which has been a natural state of affairs in human history –  and how/if actions, institutions and structures are put in place to reduce it.

In Paul Graham’s book Hackers and Painters there is a chapter called Stealing It which is quite illuminating about corruption:

In conflicts, those on the winning side would receive the estates confiscated from the losers. In England in the 1060s, when William the Conqueror distributed the estates of the defeated Anglo-Saxon nobles to his followers, the conflict was military. By the 1530s, when Henry VIII distributed the estates of the monasteries to his followers, it was mostly political. But the principle was the same. Indeed, the same principle is at work now in Zimbabwe.

In more organized societies, like China, the ruler and his officials used taxation instead of confiscation. But here too we see the same principle: the way to get rich was not to create wealth, but to serve a ruler powerful enough to appropriate it.

This started to change in Europe with the rise of the middle class. Now we think of the middle class as people who are neither rich nor poor, but originally they were a distinct group. In a feudal society, there are just two classes: a warrior aristocracy, and the serfs who work their estates. The middle class were a new, third group who lived in towns and supported themselves by manufactoring and trade.

Starting in the tenth and eleventh centuries, petty nobles and former serfs banded together in towns that gradually became powerful enough to ignore the local feudal lords. Like serfs, the middle class made a living largely by creating wealth. (In port cities like Genoa and Pisa they also engaged in piracy). But unlike serfs they had an incentive to create a lot of it. Any wealth a serf created belonged to his master. There was not much point in making more than you could hide. Whereas the independence of townsmen allowed them to keep whatever wealth they created.

Once it became possible to get rich by creating wealth society as a whole started to get rich very rapidly. Nearly everything we have was created by the middle class. Indeed, the other two classes have effectively disappeared in industrial societies, and their names have been given to either end of the middle class. (In the original sense of the word, Bill Gates is middle class.)

But it was not till the Industrial Revolution that wealth creation definetly replaced corruption as the best way to get rich. In England, at least, corruption only became unfashionable (and in fact only started to be called “corruption”) when there started to be other, faster ways to get rich.

Seventeenth century England was much like the third world today, in that government office was a recognised route to wealth. The great fortunes of that time were still derived more from what we now call corruption than from commerce. By the nineteenth century that had changed. There continued to be bribes, as thee are still everywhere, but politics had been left to men who were driven more by vanity than by greed.

Letting Entrepreneurs Create Wealth

Hackers and Painters

I’m currently immersed in a book I got for Christmas, Hackers and Painters – Big Ideas from the Computer Age by Paul Graham. It’s in parts absolutely brilliant and, even better, I think I can connect it to the Ivory Coast without too much of a stretch.

From the chapter “How to make Wealth”:

Making wealth is not the only way to get rich. For most of human history it has not even been the most common. Until a few centuries ago, the main sources of wealth were mines, slaves and serfs, land and cattle, and the only ways to acquire these rapidly were by inheritance, marriage, conquest, or confiscation. Naturally wealth had a bad reputation.

Two things changed. The first was the rule of law. For most of the world’s history, if you did somehow accumulate a fortune, the ruler or his henchmen would find a way to steal it. But in medieval Europe something new happened. A new class of merchants and manufacturers began to collect in towns. Together they were able to withstand the feudal lord. So for the first time in history, the bullies stopped stealing the nerds’ lunch money. This was naturally a great incentive, and possibly indeed the main cause of the second big change, industrialization.

A great deal has been written about the causes of the industrial revolution. But surely a necessary, if not sufficient, condition was that people who made fortunes be able to enjoy them in peace. One piece of evidence is what happened to countries that tried to return to the old model, like the Soviet Union, and to a lesser extent Britain under the labour governments of the 1960s and early 1970s. Take away the incentive to wealth, and technical innovation grinds to a halt.

Encouraging signs and trends for Africa and the Ivory Coast

Both in pre- and postcolonial times, as an African, if you set up a successful enterprise of any kind, you would be likely to run into the ruler or his henchmen (colonial ruler / homegrown dictator depending on the era) sooner or later.  For a very long time incentives to create wealth in most of Africa have been quite lousy – warriors and politicians regularly squashed entrepreneurs. However, looking at Freedom House scores, the World Bank’s Doing Business survey and other places, it seems that there has been a positive trend since the early 90s that has also resulted in higher growth figures.

In the Ivory Coast, it’s still early days for the Ouattara government, but there are plenty of encouraging signs that the government and the public administration in general, are strengthening the rule of law, and to a lesser extent than before use their power to put wealth created by ordinary Ivorians into their own pockets.

As to risks of things getting worse, I do not think the main problem is Gbagbo’s supporters coming back to power. That would indeed be bad, but I don’t think they can. They don’t have enough support to win a democratic election, even if they were united which they are not.  I think Gbagbo’s figures in the 2010 elections were augmented by his party controlling the state, but even then it wasn’t enough.

As to taking power through a military coup, many exiled Gbagbo supporters certainly would like to, but I don’t think they have the necessary resources or a neighbouring country prepared to offer military support.

Instead my main worry is that Ouattara’s government is behaving itself not because of a strong and independent media (Ivorian media isn’t), not because of strong institutions, civil society, or pressure from the Ivorian people, but because the person of Alassane Ouattara.   Ouattara is turning 70 years soon, and is not going to be there forever.  Hopefully when Ouattara eventually steps down,  institutions and checks and balances have strengthened so that things will work out even if the next guy isn’t as great.  Wealth created by entrepreneurs should contribute to increasing the size of the middle class which in turn is great for strengthening the civil society and democratic institutions. It’s tough being a dictator in a country with a large middle class.

Letting the nerds keep their lunch money

Back to Paul Graham, here’s the follow up on the text above:

Startups are not just something that happened in Silicon Valley in the last couple decades. Since it became possible to get rich by creating wealth, everyone who has done it has used essentially the same recipe: measurement and leverage, where measurement comes from working with a small group, and leverage from developing new techniques. The recipe was the same in Florence in 1200 as it is in Santa Clara today.

Understanding this may help to answer an important question: why Europe grew so powerful. Was it something about the geography of Europe? Was it that Europeans are somehow superior? Was it their religion? The answer (or at least the proximate cause) may be that the Europeans rode on the crest of a powerful new idea: allowing those who made a lot of money keep it.

Once you are allowed to do that, people who want to get rich can do it by generating wealth instead of stealing it. The resulting technological growth translates not only into wealth but into military power. The theory that led to the stealth plane was developed by a Soviet mathematician. But because the Soviet Union didn’t have a computer industry, it remained for them a theory; they didn’t have hardware capable of executing the calculations fast enough to design an actual airplane.

In that respect the Cold War teaches the same lesson as World War II, and for that matter, most wars in recent history. Don’t let a ruling class of warriors and politicians squash the entrepreneurs. The same recipe that makes individuals rich makes countries powerful. Let the nerds keep their lunch money, and you rule the world.

Click to get to a chapter of the book in pdf

Economic Complexity

Atlas of Economic Complexity

I came across something called the Atlas of Economic Complexity. It’s an attempt to measure the  “productive knowledge” of each country using network analysis techniques on the flows of trade – a bit like Google analyses internet links to rank websites. From the Atlas:

Ultimately, what countries make reveals what they know.  Take medical imaging devices. These machines are made infew places, but the countries that are able to make them, such  as the United States or Germany, also export a large number of other products. We can infer that medical imaging devices are complex because few countries make them, and those  that do tend to be diverse. By contrast, wood logs are exported  by most countries, indicating that many countries have the  knowledge required to export them.

Now consider the case  of raw diamonds. These products are extracted in very few  places, making their ubiquity quite low. But is this a reflection  of the high knowledge-intensity of raw diamonds? Of course  not. If raw diamonds were complex, the countries that would  extract diamonds should also be able to make many other things. Since Sierra Leone and Botswana are not very diversified, this indicates that something other than large volumes of knowledge is what makes diamonds rare.


Think of a particular country and consider a random product. Now, ask yourself the following question: if this country cannot make this product, in how many other countries can this product be made? if the answer is many countries, then this country probably does not have a complex economy. On the other hand, if few other countries are able to make a product that this country cannot make, this would suggest that this is a complex economy.

Let us illustrate this with a few examples. According to our measures, Japan and  Germany are the two countries with the highest levels of economic  complexity. Ask yourself the question: if a good cannot be produced in Japan or Germany, where else can it be made? That list of countries is likely to be a very short one, indicating that Japan and Germany are complex economies.

Now take an opposite example: if a product cannot be made in Mauritania or Sudan, where else can it be made? For most products this is likely to be a long list of countries, indicating that Sudan and Mauritania are among the world’s least complex economies.


In fact, as we show in this atlas, the gap between a country’s complexity and its level of per capita income is an important determinant of future growth: countries tend to converge to the level of income that can be supported by the knowhow that is embedded in their economy.

Makes a lot of sense, and especially the part about predicting economic growth is interesting.  The authors of the Atlas claim their method does wonders in this area: (more on that in an Economist article entitled Complexity Matters)

In fact, it beats measures of competitiveness such as the World Economic Forum’s Global Competitiveness Index by a factor of 10 in predicting growth for the following decade. It also beats by similar margins measures of human capital and governance.

So what are the predictions for economic growth?   The Atlas includes countries with a population above 1.2 million, trade above USD 1 billion and reliable data. Altogether 128 countries meet those criteria. In the map below they are all ranked according to their expected GDP growth to 2020:

Expected GDP growth to 2020

So it looks like East Africa is the place to be (and India), but West Africa isn’t looking too bad either.

What about the Ivory Coast?

Unsurprisingly the Ivory Coast doesn’t rank very high on economic complexity on a global scale. It’s 99th out of the 128 countries surveyed, and 11th out of 26 Sub-Saharan countries.

Since the Ivory Coast is slightly poorer than it’s economy is “un-complex”, plus having a fast growing population, prospects for economic growth are relatively good. The Ivory Coast ranks 28th of 128 in expected total GDP growth up to the year 2020.
The top of this list is made up of:

1. Uganda
2. Kenya
3. Tanzania
4. Zimbabwe
5. Madagascar
6. Senegal
7. Malawi
8. India

However, if one removes the population growth and looks at expected GDP growth per capita, the African countries fall back a bit.  Ivory Coast ranks  76th/128  in expected  per capita growth to 2020 – and that’s based on figures from 2008. And well, the question is if the Ivory Coast can move away from practically only exporting pretty simple stuff. Here are Ivory Coast’s exports in 2008:

Ivory Coast exports (click to enlarge)

UPDATE: Found two interesting articles about economic complexity:

The Art of Economic Complexity – New York Times

Complexity and the Wealth of Nations – Harvard Magazine


Omnipresent and omnipotent

The blog drogbascountry recently mentioned a world bank publication that described difficulties getting things through the port of Abidjan:

“The other major area with lots at stake, is the port of Abidjan. A real hub for many countries in West Africa, the port was the object of a first reform, which among other things led to the concession of the container terminal at the end of 2003. Despite the controversy of this move, the container port has become the highest-performing along all the African Atlantic coast, up to Durban, with a working speed of 23-30 containers an hour. But paradoxically, as a recent World Bank study showed on the sources of Ivorian growth, the port is one of the least competitive in West Africa because of harassments of all kinds, the costs of moving goods, and the obstacles to foreign trade. So, the container transit times are around 9-12 days, as opposed to 2 days at the port of Dakar. The overall costs of sending goods through Abidjan to Burkina Faso is 16% more expensive than from Lome [Togo] and 40% more expensive than Tema in Ghana. Overall, the port of Abidjan is estimated to be 35% more expensive than Lome. This situation is due to, among other things, the number of different hoops to jump through at the port and above all the omnipresence and omnipotence of the customs service.”

This is even worse than I thought and seems to be an area where the Ouattara administration is disappointing.

However, it’s not surprising that customs services are powerful in developing countries. When illiteracy is high, the informal sector large, and state institutions not capable of enforcing a complex all covering tax system, custom duties become a very important and easily collectable revenue for the state.   In fact, for most – if not all – countries in the western world custom duties were the largest source of income for the state up until the beginning of the 20th century.

Here are two graphs for the US:

Source: P. Krugman "The Political Economy of Trade Policy" Princeton
From the US Census of 1870. (Click to enlarge) Source:

Or to take an example closer to home, we have the toll paid by ships passing the Öresund straight between present day Sweden and Denmark:

King Eric of Pomerania introduced the Oresund Toll in 1429. All ships passing Helsingör had to pay duty to the Danish Crown (whether the cargo was going to or from a Danish port, or not). For centuries, the Oresund Toll was the most important source of revenue for the Danish Crown, furnishing the kings with relative independence of Denmark’s Privy Council and landholding aristocracy.   Source:

Kronborg Castle in Helsingör - built to collect the customs duty

I bet the Customs Service in Helsingör back in the day was just as omnipotent and omnipresent as the one at Abidjan port. Having big guns aimed at passing ships helped I guess.

19th century mixing with the 21st

So, how important are custom duties for the Ivory Coast today?  Looking at the Ivorian state budget for 2011, the total size is 3.05 trillion CFA francs (4.65 billion euro).  Of that the fiscal receipts are projected at only 1.216 trillion CFA francs (1.85 billion euro), the rest is rollover of debt, aid and various loans.

Projected income for 2011 from import duties is 343 billion CFA Francs (522 million euro) and from exports duties 210 billion CFA francs (320 million euro). So in total custom duties are 45.5% of total ivorian fiscal receipts for 2011.  Not quite like Denmark in the 15th century, but in line with the US in the second half of the 19th century.

When travelling in West Africa today, I find that you have this quite interesting mix of things that fit in the 19th century (e.g. manual craftmanship, horses and donkeys used for transport of goods) and others that are squarely 21st century like cellphones, skype and Canal+.  Guess customs can be put in the former category.

UPDATE: I have to add that while the 19th century elements can be fascinating for a visitor, west africans would be a lot better off if things were more 21st century and less 19th century. Which ever way one measures it, life on average in Europe’s 19th century pretty much sucked compared to  the 21st century.

This story from 19th century Sweden from the Brain Gain and a Historical Lookback post gives an example:

“I have worked in my profession”, says a poor shoemaker, “for 30 years and I can say that I have not yet managed to earn more than 1 krona [the Swedish currency unit] on average per day during the year.  I have usually worked 17-18 hours per day, but never managed to save enough to buy my own home. I am growing potatoes on a small plot of land on a slope close to where I live. I have still managed to raise seven children and now it’s looking bright even for me, because I’ve started to build my own home, not by my own earned money, but by money my oldest daughter, she is now 18, has sent home from America. She left when she was 14, and started sending us money already the first year. Since she turned 17 she has regularly sent us 10 dollar per month, and sometimes more, so that we in four years have received 1,500 kr from her. It’s with this money we now build our home.  But isn’t it curious that one can work hard a whole life here in Sweden and not manage to achieve as much as a young girl can save in a couple of years in America. I could never speak badly of America or the emigration, because I don’t know what would have happened to us if we hadn’t managed to bring the girl over there.”

Which I commented:

“This story has present day Africa written all over it:  Long working hours as self employed, subsistence farming, many children, strong family ties, reliance on remittances from abroad, children supporting parents, parents helping children moving abroad knowing they will not see them for years.”

Empty houses

Effects of the absence of mortgages

Not so far away from my house in the Cocody municipality of Abidjan, there is this:


This is a house that was built in 2007, and has stood empty since then.  What’s happened is that someone signed a contract with the building society to pay the full value of the house bit by bit in tranches. Since mortgages are uncommon and very difficult to obtain, houses are usually bought this way, and the buyer doesn’t get access to the house until the full amount is paid.  In this case for some reason or another, the buyer has run out of money and has not yet been able to make the full payment. No one else can take it over either, since the buyer’s partial payment and claim on the house is still valid.

This is quite a common sight in newly built areas in Abidjan, and fortunately it doesn’t have the effect of depressing prices in the entire neighbourhood, like for example foreclosures in the US.

Too easy money

Interestingly, the opposite financial condition, ie when it’s very easy to obtain mortgages and real estate related debt, can have exactly the same effect. Here’s a so called ghost estate in Ireland:

Easy credit, a housing boom and a belief that house prices always go up, caused otherwise non-viable developments to be built. When the boom ended, developers ran out of money, and abandoned half-finished houses.  Unlike the empty houses in Abidjan though, some of the Irish ones could be razed without ever being inhabited.


Doug Casey on Africa

Rewards are more than commensurate

I was listening to an interview with famous investor Doug Casey, and not at all looking for, or expecting anything Africa-related. But in the middle of it, there’s the following exchange:

Casey: If I was going to advice somebody getting out of high school right now. I would say take the money and the time you would spend going to college which is what everybody else is doing. It’s usually a mistake to do what everyone else is doing.  And figure out what you should really do. Perhaps it would be to travel around the world with a backpack for a year looking for oppurtunities to start with. I can think of  lots of things but not go to college and take liberal arts.

Interviewer: Fair enough. You mention in one of your blogs that you are long and buying in Cairo right now. You said that Africa was the best place  in the world. Do you recommend that a young kid buys a suit and heads to Africa or what are you doing there, what do you see for that continent?

Casey: Well, there is about 50 countries in Africa. They are all very different. Most of them are quite backward, quite isolated, and I think that is the place to go. In Egypt right now everybody knows [inaudible] buy when blood runs in the streets. It’s harder to do in fact than it is in theory because it’s scary, but I’m involved with several friends buying apartments in downtown Cairo right now. Beautiful belle epoque apartments with 14 foot ceilings in classic buildings that are falling apart, because they have been rent controlled for the last 40 years. So we are buying the apartments, we are paying people key money to move out, we are renovating them, and the economics are such that I think we should be able to double our money in a couple of years on a cash basis.

So you look for things like that, but in every country in Africa you go to… I suggest Africa because it has the most anomalies, because it gets the least traffic from outsiders. And if you go to a country like Cameroon or Gabon or the Congo for instance. If I was landed in one of these places naked and penniless, I’d like to believe within a few weeks I could be sitting down with the president. Part of it is the more than 50 mile away phenomenon. Anyone that’s an outsider, they don’t really know who you are, they can’t find out, but if you are sharp, keep your eyes open, have something to say, something to contribute, you can do things there, because you are special you are different in those countries. Here, you are just one of millions other people just like yourself. So that’s why I go to Africa, it’s still kind of a last frontier.

Interviewer: Still probably one of the riskiest places to be.

Casey: Yeah, but the rewards are more than commensurate.

Another recent interesting optimistic piece about investing in Africa is an article in Wall Street Journal entitled Spelling Out Growth.

At a second thought I’m investing in Africa and then I focus on positive stories on investing in Africa – that’s quite a set up for confirmation bias.  So to counter that I’ll include some of the zerohedge comments to the Casey interview:

he lost me at “buy apartments in cairo”…  seriously, cairo has got to be one of the most dangerous places to be right now, ground zero for the beginning of the third world war.. i would rather take my chances in the bond market.

yes i agree !    i’d rather invest in a daycare center run by Casey Anthony, than buy Cairo apartments right now…geez

Hard to believe that Cairo would be a good place to invest at this time but Doug sure as hell won’t have much competition there or other parts of Africa, except of course, from the Chinese and the “good” Al Qaeda, as usual, funded by the west and currently dropping humanitarian bombs on Libya,

Feels much better now.  Time to re-quote Oscar Wilde: “Whenever people agree with me I always feel I must be wrong.”  and Casey’s “It’s usually a mistake to do what everyone else is doing.” is pretty good too.

Observations and Impressions

Back home now. Time for some impressions from the Ivory Coast.

Pot hole indicator

As usual I’ve riding a lot of taxis (never my own taxi though) and talking to taxi drivers.  Abidjan taxi drivers are almost all Ouattara supporters so they are a bit biased, but on issue of road conditions I think their assessment is as accurate as it gets.  And what they say is that roads for the first time in a long time are getting better, pot holes are getting fixed, roads paved, and often they point out a stretch of road which they say previously was impassable.

Here’s what they are talking about:


Voie de Gesco under Gbagbo. Images from the Ivorian Ministry of Infrastructure. (H/t Frederic Tape)


Voie de Gesco now


Voie de Saguidiba pre-roadworks


Voie de Saguidiba now

Sense of Optimism

Beside roadworks, another striking thing is that Abidjan has gotten cleaner.  I mean there is still a lot to do, and you still see trash along the roads, in the lagoon and well everywhere, but it’s gotten better, and you see teams of cleaners at work all over the city.

Then we have the rush hour  traffic jams which have moved two hours earlier in the morning due to the new administration emphasising punctuality and work ethic throughout the public sector.

All in all there are tons of undeniable signs that things are changing (and almost always for the better) which creates a sense of optimism. I have heard people say that one can start to be proud to be Ivorian again, and that under his first few months Ouattara has done more than Gbagbo did during 10 years.

Strong Buy

Talking to people in the real estate sector, they say that business is coming back  and that it seems to be stronger than pre-crisis levels. What I think has happened is that in one swoop trust in Ivory Coast’s institutions has strengthened, emboldening local businesses and attracting the most risk-willing foreign investors. I mean, it’s still a place that just had a civil war and where armed troops can be seen all over the place – usually not what foreign investors are looking for.

Hopefully  the increased trust in Ivory Coast’s institutions is not just short term effect that will be eroded by corruption, but is based on fundamentals that are here to stay.  If that’s the case, property rights should be perceived as stronger than before, increasing the value on pretty much everything in the Ivory Coast. And that would mean a strong buy on ivorian real estate.


Getting off the Koutoukou

Guinness in Africa

I asked a friend today what the top three markets for Guineess beer are. He pretty quickly came up with the UK and Ireland, but then guessed China, Germany, USA, Japan and France before I had to tell him Nigeria is No 2 as per an article entitled Nigeria set to overtake UK as largest market for Guinness  on

Unlike in developed markets, commercial beers like Guinness are a bit of a luxury product in sub-saharan Africa:

“The breweries sector in Sub-Saharan Africa is very attractive,” says Nothando Ndebele, Head of Research, Sub-Saharan Africa (SSA) at Renaissance Capital. “While per-capita consumption of alcohol is as high in SSA as in most developed markets, consumption of commercial beverages remains low relative to home-brewed alternatives. With rising income levels and increasing rates of urbanisation, we expect commercial beverages to continue gaining market share. This should support strong volume growth for the sector.”

It looks commercial beer consumption could be a leading indicator for increased discretionary spending, and worth following. The questions is, when Nigerians or Ivorians for the first time have some money to spend beyond basic needs, what do they spend it on?   I would guess nicer clothes and cellphones, but beer is probably up there too.

UPDATE: I forgot, marriages, funerals and religious events (like going to Mecca) are very likely at the top of the spending list too.

I did a quick search, but did not find any non-gated data on commercial beer consumption in the Ivory Coast.  Would have been interesting to see.

Office Space

Another datapoint that supports the Macro Case for the Ivory Coast also comes from How we made it in Africa. It’s about office space provider Regus setting up business in Abidjan:

“Africa is a key part of the world where the economy is expanding . . . and our offices are particularly well adapted to emerging markets to allow companies to get a foothold and test the water”, vice-president, Olivier de Lavalette told How we made it in Africa.

The company will be hoping demand in Ivory Coast matches that in neighbouring Ghana.

After the opening of an office in Accra in April 2010, occupancy rates are at 95%, far beyond initial forecasts.