business

Ivory Coast Restaurants Empty as Crisis Spurs Violence

Sylvain N’Guessan gazes over the empty seats at Le Phenicia restaurant he manages in Abidjan, the commercial capital of Ivory Coast, wondering how he will pay the bills as worsening violence keeps clients away.

“We’ve had one customer so far today,” N’Guessan said from behind the bar at 7 p.m. on Jan. 16 in the affluent Rue des Jardins. He hasn’t received his December salary or paid last month’s electricity bill, he said.

The situation has deteriorated since a disputed election on Nov. 28 left the country with two rival presidents and triggered a wave of violence that has seen at least 260 people killed, according to the United Nations. Prices have soared, construction sites have closed and shops have emptied as people limit spending to essentials.

With no end in sight to the crisis, the economic paralysis may spread to the cocoa industry that generates more than a quarter of the country’s exports and spur further violence, tipping the economy into recession just three months after the International Monetary Fund forecast growth of 4 percent for this year.

“It’s clear that the GDP is going to decrease, exports are going to slow down, and imports as well,” Alassane Ouattara, one of two men claiming the presidency, said in an interview on Jan. 18. “How about the local foodstuffs sector? If this continues we are going to have shortages.”

At Gobelet market in Abidjan, one kilogram (2.2 pounds) of beef has shot to 2,500 francs ($5.12) from 1,400 francs before the election and tomatoes have climbed 67 percent to 500 francs per kilogram as traders struggle to bring their goods to market.

Optimism to Pessimism

While the Electoral Commission gave victory in the election to Ouattara, the Constitutional Council declared incumbent Laurent Gbagbo as the winner, citing voter fraud in some northern states. Support from the United Nations, the European Union, the African Union and the U.S. has failed to oust Gbagbo, who retains the loyalty of the army.

As well as the 260 deaths in the country since the elections, 68 people are missing and 23 reported raped in the western town of Duekoue last week, Simon Munzu, the human rights head at the UN mission in Ivory Coast told reporters in Abidjan today.

It’s a far cry from the optimism that characterized the run-up to the election. The vote was meant to reunify the country that has been split between a rebel-held north and a government-controlled south since a military uprising in 2002.

Lost Decade

The economy has expanded an average 1.1 percent since the civil war as the country missed out on the wave of foreign investment in Africa from nations such as China. The election was meant to change all that.

“There was a lot of confidence going forward that the political situation would be resolved and that as a result the economics will improve, but recent developments show that this view is losing ground,” Yvonne Mhango, an economist with Renaissance Capital Ltd., said in an interview.

“It’s a significant shock” to the economy, said Samir Gadio, an emerging markets strategist with Standard Bank Plc in Lagos, Nigeria. “It’s a shock which is likely to be much more substantial than what the country experienced in 2002 when the civil war broke out.

The World Bank has stalled loans of $245 million and has said Ivory Coast won’t qualify for $3 billion of debt relief until Gbagbo steps down. The country on Dec. 31 missed a $29 million interest payment to holders of its Eurobonds. Creditors will get the payment before the end of the 30 day grace period if they recognize Gbagbo as president, spokesman Ahoua Don Mello said on Jan. 17.

Eurobond Slump

The Eurobonds have fallen 39 percent from their record high of 62.875 cents on the dollar on Oct. 14, before the first round of voting.

Emmanuel Agbozo, a Togolese plumber who used to split his time between doing home repairs and working on building sites, said he has only worked a few days since the crisis started.

“I have to reduce all my expenses because I’ve earned less money than usual,” he said in an interview. “So I’ve not paid my water bill yet. I hope they don’t cut my supply.”

Many government employees may soon find themselves in a similar position after Gbagbo’s administration paid less than half of the government’s December wage bill, according to Toikeusse Mabri, Ouattara’s minister of development.

Empty Market

With many people tightening their belts, food sellers outnumber buyers under the corrugated roofs of Abidjan’s Treichville market on an island in the lagoon that wraps around the city.

“People don’t come anymore,” said Salimata Kamarate, a 50-year-old shea butter seller, who hadn’t made a single sale by 12:30 p.m. on Jan. 6. “They prefer saving their money because nobody knows what could happen tomorrow.”

For many foreign-owned companies life goes on as normal. Tullow Oil Plc, Nestle SA, Barry Callebaut AG, the world’s largest bulk chocolate maker, and Archer Daniels Midland Co., a cocoa processor, say their businesses in the country are continuing to operate.

“Those who are already established often are able to just go on,” Renaissance Capital’s Mhango said. “In certain industries they can operate as enclaves and they aren’t impacted by what is happening in the urban areas.”

Still, concern over supply shortages has pushed the price of cocoa 13.7 percent higher since the vote. Prices for the beans rose a fourth day today, adding $33, or 1.1 percent, to $3,133 per metric ton at 12:32 p.m. in London trading.

Back on the streets of Abidjan, the crisis is more immediate and people are calling for a solution soon.

“They have to come to an agreement,” said N’Guessan. “I won’t be able to hold on for another month under these conditions.”

(Updates with new death toll in third paragraph, cocoa price 22nd.)
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