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WEEKLY NEWSLETTER
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Ivory Coast
Index
ABI Foundry, Abidjan
Courtesy World Bank Photo Library
At independence, CĂ´te d'Ivoire manufactured little more
than
timber by-products, textiles, and food processed from
local
agricultural products. Little was exported. The lack of an
indigenous, skilled labor force, inexperienced management,
and low
domestic demand limited industrial growth.
At that time, there was little direct state involvement
in
manufacturing. Nearly all industrial companies were
financed by
private--mainly foreign--capital. On the strength of its
growing
domestic market and, in the 1960s and 1970s, the
development of
regional markets under the aegis of the West African
Economic
Community (Communauté Economique de l'Afrique
Occidentale--CEAO),
Ivoirian industrialization flourished.
Following independence, light industry became one of
the most
rapidly growing sectors in the economy. Between 1960 and
1980,
manufacturing grew at the rate of 13 percent per year, and
its
contribution to GDP rose from 4 percent in 1960 to 17
percent in
1984. The number of firms rose from 50 at independence to
more than
600 in 1986. Expanding most rapidly were import
substitution
industries like textiles, shoes, construction materials
(such as
cement, plywood, lumber, ceramics, and sheet and
corrugated metal),
and industries processing local agricultural raw materials
(such as
palm oil, coffee, cocoa, and fruits).
Although agricultural processing plants used locally
produced
inputs, import substitution industries--as well as firms
manufacturing or providing chemicals, plastics,
fertilizers, and
engineering services--imported their raw materials (50
percent of
intermediate inputs were imported). In many instances,
these costly
intermediate inputs raised the price of completed products
far
above the price of comparable imported goods.
Consequently, the
government promoted and protected local industry by
imposing
tariffs and incentives.
The system of industrial tariffs and incentives,
however,
proved to be shortsighted. These measures avoided
quantitative
import restrictions and included a tariff schedule that
protected
all industrial activities, whether threatened by imports
or not. By
assigning tariffs according to the degree of processing
and by
exempting some inputs that could be produced locally and
less
expensively, the government discouraged domestic
production of
intermediate inputs.
Additional efforts to promote industry, and
particularly smalland medium-scale enterprises, were equally inadequate.
Management
personnel often lacked skills and experience, political
connections
often influenced policy, and there was little coordination
among
state bureaucracies responsible for assisting the
struggling firms.
In response, the government promulgated a new investment
code in
1984 (subsequently altered in 1985) by providing bonuses
for
exports and by reforming tariffs, which served to shelter
elements
of an already overprotected and inefficient industrial
sector.
In 1987 the government adopted additional measures
originally
proposed by the United Nations Industrial Development
Organization
(UNIDO) to expand exports and make industry more
efficient. This
new policy proposed modernizing import substitution
industries,
manufacturing new products with high added value for
export, and
expanding the existing range of agriculture-based,
export-oriented
industries. The new exportable agricultural products were
to
include processed food (maize, cottonseed, fruits,
vegetables,
cassava, yams, and coconuts), textiles (spinning and
weaving,
ready-to-wear clothing, and hosiery), and wood (paper and
cardboard). The new, nonagricultural exports were to
include
building materials, such as glass and ceramics; chemicals,
such as
fertilizers and pharmaceuticals; rubber; agricultural and
cold
storage machinery; and electronics, such as computers
(see
fig. 10). As part of the reform package, UNIDO also insisted
that credit
restrictions be eased, domestic savings potential be
tapped, and
funds held abroad by Ivoirians be repatriated. Under
pressure from
the World Bank, the government cut its levy on pretax bank
transactions from 25 to 15 percent.
The process of modernizing import substitution
industries and
increasing exports included measures to reduce the high
level of
customs protection accorded local industries and to extend
export
subsidies. In November 1987, the government began a
five-year
program to reduce import duties and surcharges
progressively to an
eventual 40 percent of value added for the entire
industrial
sector. In addition, the government extended export
subsidies to
the entire manufacturing sector in order to compensate for
comparatively high local production costs in the
agroindustrial
sector (oils and fats, processed meat, fish, chocolate,
fruits, and
vegetables) and for such industrial goods as textiles,
carpets,
shoes, chemicals, cardboard, construction materials, and
mechanical
and electrical goods. As of early 1988, the reforms had
not yet
yielded the desired results, partly because export
subsidies were
granted on an ad hoc basis with no assurance that they
would be
renewed and partly because the reforms were financed from
customs
receipts, which, under the government's pledge to reduce
tariff
protection, were diminishing.
Data as of November 1988
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