Oct. 22 (Bloomberg) -- Ivory Coast’s tax rates and decaying infrastructure are limiting private investment in the world’s largest producer of cocoa, Commerce Minister Jean-Louis Billon said.
“We need more investments from the private sector,” Billon said Oct. 19 in an interview in Abidjan, the commercial capital. “Expectations for an economic boom were high after years of stagnation. The situation has turned out to be more complicated because of the general state of the infrastructure and institutions.”
The West African nation is bouncing back from a decade of crisis sparked by an army mutiny in 2002 that split the country into a rebel-held north and a government-controlled south. Unrest flared again after President Laurent Gbagbo failed to hand over power following elections in 2010. More than 3,000 people died as he refused to accept defeat to Alassane Ouattara, who eventually took office in May 2011. The economy contracted about 5 percent that year.
Ivory Coast’s economy will expand more than 8.5 percent this year after growing 9.8 percent in 2012 as the country builds roads and increases power generation, the International Monetary Fund said last month. The government is working on improving infrastructure to make it more competitive, Billon said. The nation’s corporate tax rate is 25 percent.
Foreign donors have pledged $8.6 billion to fund $19 billion of investments in the next two years. The money will go on building highways, railroads, a third bridge spanning the lagoon in Abidjan, and an expansion of Abidjan and San Pedro ports. A hydroelectric dam is being built near the western town of Soubre.
Ivory Coast needs to reduce tax rates to attract more investors, Billon said. A new investment code, adopted last year, offers fiscal advantages for investors and is already providing incentives, he said.
Billon earlier this year criticized the choice of Bollore SA to build and run Abidjan’s second container terminal, saying it violated the competition law and would create a monopoly. The French company already runs the harbor’s first terminal. The West African Economic and Monetary Union’s competition department is investigating the bid.
While commerce courts set up last year and a competition commission have improved the business environment, governance issues remain a concern for investors, Billon said.
“We don’t get rid of bad habits easily,” he said. The proportion of public contracts awarded without bidding rose to 57 percent in the first three months of the year, from 40 percent a year earlier, according to the National Public Procurement Regulating Authority.
“Many people are trying to take advantage of the economic recovery,” Billon said. “There is more money coming through, the budget is more ambitious and the temptation is higher.”
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