Ivory Coast - Manufacturing

Manufacturing

At independence, Côte 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. 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.

Oil
Natural Gas

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