economy in recent years. The mining and hydrocarbon sectors are considered to hold strong
potential for the future. Côte d’Ivoire also has emerged as Francophone Africa’s main refin-
ery centre.
Côte d’Ivoire is a member of the CFA franc zone. After the country’s economy was hurt
by the overvaluation of the CFA franc in the 1980s, it was helped by a devaluation in 1994.
With rising exports, GDP growth reached 6 to 7 per cent in the mid-1990s, but then fell to 4.5
per cent in 1998, 2.8 per cent in 1999 and -2 per cent in 2000. The country’s previously con-
sistent trade surplus was severely reduced by falling international commodity prices, partic-
ularly those for coffee and cocoa. During the 1990s, even before the balance of trade
deteriorated, increasing debt service obligations and a suspension of international aid were
reflected in a widening current account deficit. Other recent factors contributing to the deficit
have included excessive tax exemptions, weak expenditure control and off-budget spending.
The AFD, the IMF and the World Bank suspended aid and reform-linked loans in 1999 and
2000 because of concerns about corruption, mismanagement and failure to meet debt service
obligations. In conclusion, country economic risk as it relates to the Azito power project is a
more troubling factor than when the project financing was arranged in 1999, but it is, of
course, mitigated by multilateral agency participation.
Critical success factors and lessons learned
In his article in the Journal of Project Finance(Fall 2000), mentioned above, John S. Strong
concluded that the Azito project was a model for future infrastructure projects in the region.
Some of the reasons Strong cited for the project’s success are listed below.
- Côte d’Ivoire’s economic policies and growth after its 1994 devaluation and its debt
restructuring initiatives gave project sponsors and lenders confidence in the success of a
private project in the power sector. - Power needs sufficient to justify a project of Azito’s size were clearly demonstrated.
- The government, Société Générale and the IFC were able to demonstrate to the financial
markets that the Ivorian power sector had established economic viability through sound
tariffs and financial management. - Lenders could see a precedent in the CIE and CIPREL concessions, which were work-
ing well. - The government was willing to acknowledge the need to develop concession contract
laws to cover Azito and future projects. - As a result of its recent work in power sector reform, the government had clear notions
concerning the role of private participants and social goals such as rural electrification. - The government put together a strong team with good technical, financial, managerial
and negotiating skills. - The IDA partial risk guarantee was critical in attracting commercial lenders to a country
that was not yet an established international borrower, but the project financing would have
taken less time if the guarantee had been introduced earlier in the negotiating process. - The joint arrangers, the IFC and Société Générale, had to bridge cultural gaps, but team-
work and the complementary skills of the two organisations were essential in designing
a loan structure that could be syndicated successfully in the commercial bank market. - Among other strengths, the three sponsors brought technical skills, previous experience
POWER PLANT