Election hopes fuel mood of optimism in Ivory Coast

* Perception of Ivory Coast improving among investors

* Waiting to see if stability will hold before they commit

* Eurobond yield falling, could ease further on polls

By Tim Cocks

ABIDJAN, Sept 28 (BestGrowthStock) – As Ivory Coast looks closer
than ever to elections aimed at putting eight years of crisis
behind it, cautious optimism has replaced despair among
investors keen to revive West Africa’s former star economy.

Breakthrough deals this month in disputes over voter
eligibility mean that after six cancelled dates in five years, a
presidential election slated for Oct. 31 might just go ahead.

In the commercial hub of Abidjan, a sprawling lagoon-side
city of skyscrapers, multi-lane highways, cocoa factories and
palm trees, businesses say they are more confident than they
have been for years.

“Ivory Coast has come through some tough times but we are
hopeful that as we come out of the crisis, economic activity can
get back to normal,” said Toure Karamoko, director of
advertising design and printing firm Indigo Publicite.

“But it is going to be hard work resolving our problems and
bringing investment back. An election is no magic wand,” he said
as he watched workers weld a billboard together.

A failed 2002 rebellion against President Laurent Gbagbo
left the world’s top cocoa grower divided in two and paralysed
its once-buoyant economy. Investors, most from Ivory Coast’s
former colonial master France, fled and sold up at knock-down
prices, often to more risk-tolerant Lebanese businessmen.

Foreign direct investment fell from $400 million in 2003 to
$300 million the year after as many investors ran scared of
putting money into a country seen on the brink of conflict.

As Ivory Coast struggled on, investment by 2008 recovered to
its 2003 level, with the economy set to see three percent growth
this year, above the zero percent growth at the height of the
crisis but nowhere near enough to tackle mass unemployment.

GAME-CHANGER

The game-changer was the election body’s announcement on
Sept. 2 that it had resolved a long dispute over who is eligible
to vote, and Gbagbo’s approval of the list a week later
[ID:nCOC457119].

“We were very sceptical about the possibility of an
election, but there was a breakthrough: it seems it is going to
happen,” said London-based analyst Samir Gadio at Standard Bank.

The yield on Ivory Coast’s 2032 Eurobond (CI049648839=: ) —
with a face value of $2.3 billion the biggest in Africa — has
declined steadily since the voter list accord, reaching 10.64
percent now compared to 11.3 percent last month.

Gadio forecast the Oct. 31 election could push the yield
down to 7.0 percent, with most risks over the outcome of the
election already priced into the bond.

Analysts polled by Reuters this month forecast a successful
staging of elections would push economic growth to 4.5 percent
in 2011, closer to levels at which Ivorians would start to see
an impact on their lives.

Most acknowledge that the poll in itself will not bring
instant stability, and that the long-standing rancour between
Gbagbo and challengers Henri Konan Bedie and Alassane Ouattara
means that any result could be disputed violently.

But there is a widespread view that any violence will be
short-lived, with some analysts seeing Gbagbo as favourite to
win and then prepared to offer government jobs to his rivals.

“He holds most of the cards: he controls the cocoa sector,
he controls the army and the security forces, and he holds the
south, which is the economically most dynamic part of the
country,” noted Mark Schroeder of analyst company Stratfor.

Successful elections would be a boost to Ivory Coast’s cocoa
industry, which supplies just over two thirds of the world’s
cocoa but which is in structural decline because of
underinvestment and ageing trees. Reforms have been put on ice
until after the vote.

The World Bank has tied a decision on debt relief worth $3
billion to Ivory Coast holding the vote. An International
Monetary Fund mission is in the country this week assessing the
bid and a decision is due late next year.

For many business people, the simple fact of holding
elections is a welcome break with their troubled past.

“People go on the Internet, they see travel warnings and
rebels,” said travel agent Fanny Assata. “We need an election to
change our image.” [ID:nLDE68M1YE]
(Editing by Mark John and Janet Lawrence)

Election hopes fuel mood of optimism in Ivory Coast