Blogging on the Abidjan stock exchange

For those who read French, has made a welcome return to the West African blogosphere in the last few months. The website author, Euclide (whose birthday it happens to be today), has probably done more than anyone else to promote interest in the Abidjan-based West African stock exchange (despite the fact that he’s from Congo-Brazzaville).

Reading the detail in a blog post today on the 2015 financial results of Sicable made me reflect again the benefits of blogging. Here we have someone who doesn’t even live in the West African monetary zone, and who isn’t a professional journalist or financial expert, who runs a blog in his spare time on a voluntary basis that gives us better reporting than any newspaper you’d care to buy on the streets of francophone West Africa. And it’s all for free.

In March he hopes to launch a follow-up e-book on investing in the BRVM, which I think is an initiative worth encouraging.

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Ivory Coast and Ghana

I’ve probably mentioned this before, but isn’t it intriguing that West African neighbours Ghana and Ivory Coast share so much in common, including a long border, but seem to be on such differing economic trajectories? I’ve just been reading an article from last month’s Guardian on how the Ghanaian success story seems to be coming apart. What initially sparked my interest was the fact that falling commodity prices, in particular ‘cocoa’, was mentioned as a key reason for the economic problems, when over the border in Ivory Coast, high cocoa prices are used to explain Ivory Coast’s spectacular economic growth in the last few years.

More widely, isn’t it odd that after independence Ivory Coast did so well for two decades, while Ghana did so badly. And then as Ivory Coast declined in the 80s and 90s, Ghana started getting its act together. In the 2000s, Ivory Coast had a decade horribilis, while Ghana became the poster child of Africa Rising.

Perhaps one initial lesson is that political histories and leaders matter. Two countries with similar land mass, populations, ethnicities and climates, with cocoa in the south, gold in the north and oil in the sea are following rather different tracks. If West Africa’s second and third economies were better intertwined, one would hope that growth in one, would provide benefits to the other, but sadly this doesn’t seem to be the case. In the days of the West African Power Pool, how can Ivory Coast have plentiful supplies of electricity when Ghana struggles?

Compared with the global economic story, Ivory Coast seems slightly closer to trends (though not entirely). Isn’t it weird that pump prices should be going up in Ghana as the global oil price falls so dramatically? That cocoa production and income should drop when world cocoa prices sit at historically high levels and Ivorian farmers enjoy record prices (I’ve never seen a good explanation of why Ghana’s cocoa production has dropped so significantly in recent years)? On the other hand, Ivory Coast seems to be bucking the trend with regards to the global economic slump (how long can this go on for?).

My main point though is that it’s disappointing how little comparative thinking there is whether in economic journalism, or in national politics and policy-making. Wouldn’t it be encouraging if you sometimes found the population (or at the least, the intellectual class) of one state, using the success of policies in the other state, to argue for better policy back home. ‘Hey, how come Ghana is attracting so many repatriates and why can’t we do the same?’ ‘Hey, how come Ivorians have a steady currency and power supply and we don’t?’

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Headwinds ahead

I’m lucky enough to have institutional access to Africa Confidential, and the latest edition of the newsletter makes for rather depressing reading. Economic headwinds ahead for Africa include a strong dollar, greater competition for the attention of western investors, troubles in China, devaluing African currencies, falling commodity prices, low oil prices, little set-aside for a rainy day… It all seems like a puncture in the inflating Africa Rising narrative.

According to AC, there are few shining lights on the horizon for the continent’s economies. Nevertheless from an Ivorian perspective, the country looks among the best positioned to at least stay afloat in this difficult upcoming period. Whether having well performing commodities (cocoa and coffee), little dependence on oil, a reasonable control of the wage bill, the third best economic growth in 2015, and having a stable currency…things do at least seem better than average, even if the overall global economic winds look less than favourable. Interestingly, AC even cited Cote d’Ivoire as having one of the highest value exports to other African countries, second only to South Africa (much of it probably refined oil products from the SIR).

The good news this week was the solid performance of the country in the WEF’s global competitiveness report. Cote d’Ivoire was the fastest improver, ahead of Ethiopia. Although in the AC’s categorisation (from the IMF), Cote d’Ivoire was in the category ‘fragile states’, I would think it’s likely the country will be increasingly classed with Ethiopia and Rwanda.

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The editorial meeting

Oh, to be a fly on the wall at the RTI (state tv) morning editorial meeting today. Here’s my imagined fictional account just for fun:

Editor: “Ok, folks silence, let’s make a start. [Quiet descends, nervous glances, visible stress] As you all know, the new government has yet to be announced…”

Evening news producer (ENP): “But the KOACI headline said “Remaniement, le nouveau gouvernement connu certainement ce mercredi” and it’s now Friday?”

Editor: “Go tell them to look up ‘certainement’.”

ENP: “But how long can this go on for? We’ve got a 30 minute news programme to fill this evening and not a single government minister to follow.”

Editor: “But we were promised a new dynamic ministerial line-up? And we already know the new PM?”

ENP: “Yes, but it’s the same guy as before!”

Intern: “But why don’t we get out there and gather some real stories away from the suits and ministers?”

ENP: “Impertinence! Where do you think this is, France 24? Our job is to tell Ivorians what each minister has done each day. That’s what news is, isn’t it? If people aren’t made aware of what the old men in suits have done – ceremonies, official speeches, formal visits, ribbon cutting – people will feel lost!”

Intern: “How about we get in our cars and gather some stories from the streets – you know the important developments that will really make a difference in people’s lives and the issues that concern people?”

ENP: “We tried that yesterday – we filmed some images of the harmattan dust…”

Intern: “…yes, but only 10 metres from the front door of our office…”

ENP: “That’s not fair – we even did a feature on the burns unit at the CHU Cocody hospital.”

Intern: “Yes, but that’s just round the corner from our office. How about…you know..leaving Cocody?”

Editor: “OK, enough of this insubordination. Can’t we just do what we did last night?”

ENP: “What? Show an extra long report on an old ceremony from several days ago that we already broadcast?”

Editor: “Sure. Or perhaps we could just rebroadcast the New Year’s address…”

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Ivory Coast – African country of the year 2015?

This post is both spurious and speculative, but if you had to select an ‘African country of the year’ in 2015, I would reckon Ivory Coast / Cote d’Ivoire must be in with a fighting chance. Not that I follow the other 53 countries on the continent quite as closely, but take that as a caveat. Here are a few reasons to believe that 2015 was a good year for the country.

Continental football champions (February)

It does seem a very long time ago now, but let’s not forget one of the highlights of the year – the generation of star players in the national football team finally winning the African Cup of Nations, with victory in penalties over Ghana. The tournament started with some of the lowest expectations for Ivory Coast in a decade, but all turned out well in the end. By the end of the year, Ivory Coast had recovered their place as FIFA’s top ranked African side.

Strong economic growth (May)

If 2015 was a year in which people started to feel the Africa Rising story was a bit wobbly with bad economic news out of China and low oil prices, Ivory Coast continued to hold its head high. Part of that story is about cocoa – a commodity which in 2015 bucked trends to maintain a high price (while Ivory Coast produced a record crop). Record Ivorian crops were also seen in cashew (pushing the country to become the world’s biggest exporter) and cotton.

The IMF currently predict real GDP growth of 8.2 percent in 2015, continuing the growth story started in 2012. A quick comparison with IMF projected 2015 growth elsewhere shows the country is up with the leading pack: Angola (3.5%), Cameroon (5.3%), Chad (6.9%), DRC (8.4%), Gabon (3.5%), Ghana (3.5%), Ethiopia (8.7%), Kenya (6.5%), Mozambique (7%), Nigeria (4%), Senegal (5.1%), Tanzania (6.9%), Uganda (5.2%). The stock market was the fastest rising on the continent, while the Ibrahim Governance Index put the country as the fastest improver. As a symbol of the revival I picked the African Development Bank annual conference in Abidjan in May, which celebrated the bank’s return to the city.

A peaceful election (October)

While the result was hardly a surprise, October’s presidential election could have gone a lot worse, and came after a very bad experience last time around (to say the least). Instead it was a peaceful transition to a second term for Alassane Ouattara. Ivorians learned that elections could take place without anyone having to die, and the Head of State got a strong mandate for his second term. The 2010-11 crisis was pushed a bit further back into the recesses of history.

Big infrastructure projects (December)

These were 12 months that started in December 2014 with the opening of Abidjan’s long-awaited ‘third bridge’ and ended with the new Commercial centre ‘Playce’ which includes sub-Saharan Africa’s first Carrefour and Burger King. In between you had various other bridge projects (notably at Jacqueville), roads (Abidjan-Bassam), cinemas, hotels (Hotel Ivoire refurbishment). Big progress was also made to start work on the new Heineken brewery, the port extension, the railway upgrade, the Movenpick hotel for Plateau, and the Abidjan metro.

And the big one that didn’t happen…

Perhaps the most significant development was the one that didn’t happen. This was the year in which almost every expert predicted Ivory Coast would see cases of Ebola, and somehow it didn’t.

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BRVM update 2015

As is the tradition (though one that’s about to end) the end of the year at Drogba’s Country is the moment for an update on the West African Stock Exchange (BRVM), based in Abidjan. As a recap, I started investing in 2011, and since then have seen what I consider to be quite decent growth – 17.8% (in the first 8 months) and then annual growth of 27.2%, 31.4%, and 18.6% respectively. I wanted to use this blog to highlight the little known exchange, and chart my progress (funds managed by the bank that makes investment decisions that I have no influence over). The BRVM is in the West African Monetary zone, and so uses the Euro-pegged CFA, meaning that investments don’t suffer from the inflation seen elsewhere on the continent, even if they have fallen slightly with the Euro over the past few years, relative to the dollar and Sterling.

For various uninteresting reasons, I’ve already closed my books on 2015 and start things for 2016. This year has seen growth of…44.1% – definitely the best yet. Indeed according to a recent article (in French), the BRVM has been classed as having the highest returns in Africa. As I’ve explained before, the Abidjan-based stock exchange doesn’t seem particularly logical – it hardly dropped during the Ivorian crisis of 2010-11, and in the aftermath of October’s elections (which to investors relief went peacefully) the situation has been stable albeit with a slight decline in positions. So I have no visibility on 2016.

I recently met an anthropologist who had spent several years studying the stock market boom in Vietnam – something that prompted a huge rush to invest with people taking out mortgages to finance further investment, only for it all to crash with declines of 40% in a few months. Of course such events are not infrequent in emerging economies (and of course elsewhere), and these investments have their risks. Past growth no guarantee of future returns, and all that. Nevertheless, there’s no sense of a boom around the stock exchange in Abidjan, which has not entered the popular imagination despite the growth I’ve detailed above. My hope is that the current good run will continue for at least another few years. When things turn sour, I’ll re-evaluate things, and I’ve already started diversifying into other areas.

This will be the last of these regular posts on this subject: I think the point has been made. But if it all crashes around my feet, I will tell you all about it. As I’ve said before, this particular investment seems a good way to participate in the West African growth story, while also (particularly for the diaspora) offering a better return on investment than the typical mix of badly run and high-risk schemes like rubber planting, taxis and boutiques.

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A quiet spell

It might have escaped your notice, but I haven’t blogged here for a while. Since setting up Drogba’s Country in 2011, I’ve been pretty consistent in blogging about Ivory Coast despite having left the country at the end of 2012. Nevertheless, I face two particular challenges:

  • This blog is focused on Ivory Coast, and I want to give you information that you can’t find elsewhere. My dream would be to tell you about Ivorian society in all its forms – something that is obviously difficult now I’m overseas, even if I continue to follow the country on a daily basis.
  • Secondly, and as my silence throughout the electoral period signifies, my new job means that I have to be careful about venturing into controversial areas, which means that I probably need to stay clear of saying much that’s interesting about politics.

However, I promise to continue writing here, and I hope you’ll find it worth following. There’s still very little out there in English on Ivory Coast so I think there’s a niche. The ultimate goal is to move back to Abidjan in the future and then fill these pages with rich anecdotes and information from this long-time Ivoriophile. If you can wait that long and blogs still exist, it should be worth it. In the meantime, I’ll keep writing here occasionally when inspiration comes, and life as a new-father allows. I hope you’ll continue to pass by regularly. Thank you for reading.

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A booming Ivory Coast

Exactly a month ahead of presidential elections on Friday, Reuters published a glowing tribute to the Ivory Coast boom. On the same day they also published a story on the start of work on a brand new Heineken beer factory in Abidjan, and published new IMF growth estimates that predict 8.4% growth this year and next with minimal inflation. If Ouattara needed a boost ahead of the poll, the barrage of articles will further enhance his reputation for economic management. His press team must have been doing cartwheels.

Reuters aren’t always gushing, notably with their recent detailed reporting on the continuing powerful influence of former rebel warlords. But it did underline that the last four years have seen a remarkable comeback. Given that the reforms are likely to continue, and that the elections will almost certainly run smoothly, I think we can expect Ivory Coast to increasingly become a poster child for the African growth story.

What the Reuters article didn’t speak about much, was the reasons for the growth. Fortunately the story has nothing to do with oil, which while promised as a major growth area for the Ouattara government has failed to splutter to life. The business climate has improved a lot, but the agricultural sector has been the real star – with never before seen cocoa production levels, at a time of high world prices, and all with reforms that guarantee farmers a greater percentage of the world price. The cotton and cashew sectors have also hit record production.

That leads me to two immediate questions. Firstly, why don’t other countries in the region have the same agricultural productivity? Some countries get lucky with oil or minerals, but I’m not aware that there’s anything special about Ivorian soil. What is it about Ivory Coast that has made it an agricultural powerhouse on the continent?

Secondly, we all know the first Ivorian economic miracle under Felix Houphouet-Boigny saw two incredible decades which were then quickly lost as the cocoa price collapsed. Cocoa production is likely to fall next year, but can the ‘boom times’ survive a low world cocoa price? Diversification has and will help. But I think the verdict is still out. You can’t assume cocoa revenues (through production and price) will stay as positive in coming years. Is the growth robust enough? Especially with headwinds from China.

I recognize that for all the ‘boom time’ stories in the international media, most Ivorians struggle to get by, and don’t feel particularly prosperous. One hopes though that if things can continue, most will at least feel the decade has been good to them come 2020.


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Abidjan’s ‘Club Croissances’ calls it a day

Let me tell you a story that goes back to the early days of blogging in Cote d’Ivoire. One of the pioneer blogs focused on business stories linked to the West African Stock Exchange or BRVM. The blog was the initiative of a Congolese medical doctor then based in Abidjan. The website eventually became (no longer functional) which included one of the first examples in the country of an e-book (a guide on investing in the stock exchange).

From the blog came the project ‘Club Croissances’, an investment club formed on 18 April 2009 which brought together 20 people (including two women). They signed up for ‘shares’ in the Club and as joint-owners discussed investment decisions at regular meetings. The blog itself gave updates on how the Club was doing. As a regular reader of the blog, I noticed growth in the early days was pretty spectacular.

Although membership was fixed at a ceiling of 20, the statues gave provision for additional ‘partners’ of which (to my knowledge) there were only ever two. One left almost as quickly as they joined, and the other was me. The minimum investment for a partner was 100 club ‘shares’ which had then risen to 11,500 cfa ($20) each (November 2010), plus a joining fee (I think around 50,000 cfa ($100)). Along the way some members dropped out and I was quickly admitted as a full member, allowing me to take part in discussions. A key reason for joining was to be part of what seemed like an interesting group of people and hearing other people’s views on how different companies were doing.

The Club was due to run until 2019 but things have been largely moribund for the past few years. In the last month, the decision has been taken to disband the club. Along the way, some members had already sold up, and so we’re 13 members at the end of the day. Unfortunately for me, I joined just as the Ivorian election crisis got going – a rather inauspicious time to invest in anything in Abidjan. But incredibly, the crisis had very little impact on the stock exchange (although the exchange closed for a period), although it did push the club founder to head back to Congo, and with him much of the vitality left. We tried to meet a few times, but things never properly restarted.

Financially though, the club has done well. My initial investment now leads to a payout this month of 4,722,000 cfa ($8,000), or a fourfold increase in just under five years. The portfolio of shares basically didn’t change since I joined due to inactivity. And as the newest member, I’ve gained the least. The average investment growth for club members since 2009 is 461%.

I wanted to share this experience to pick out some lessons. Firstly, even though you need to be really careful about investment projects in this low trust environment, there are good people out there, and there are gains to be made. Secondly, even with a small amount of funds, it’s possible for Ivorians to club together and invest in the stock exchange. Thirdly, the Club opened the doors to my own separate investment in the BRVM which although not growing as fast, has also done well. Fourthly, it shows the value of blogging – the Club and was a blog that opened eyes to investment opportunities in Abidjan, and was a great example of the communication channels opening up outside traditional media.

For the Club itself, a few of us are starting out on another similar adventure, this time with more dynamism. I’m putting back in everything I earned with the first Club. Who knows, eventually my initial $2,000 investment might come to enough to buy a place to live.

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Promoting investment

On a flight back to West Africa yesterday I picked up a free copy of ‘The Africa Report’ magazine, and was interested to read a two page advert taken out by the Centre for Promoting Investments in Cote d’Ivoire(CEPICI). These sorts of adverts are very common in magazines like AR and Jeune Afrique, with even some of the most tinpot countries promoting the dazzling investment opportunities available in their country with pictures of bridges, dams and ports. In general, I would have liked to see more precise fact-based promotion rather than rather vague comments like ‘Cote d’Ivoire has competitive ports’ or ‘Cote d’Ivoire, the world’s leading cocoa bean producer, processes some of its output’.

What did catch my eye though was the following comment: “In the food industry, the goal is to process 65% of cocoa (35% today) and 100% of cashew nuts (14% today) by 2016.” Regular readers will know I like to keep track of these targets, which seem to always promise something just over the horizon (but fortunately almost no-one notices when the horizons get pushed back). This is the first time I’ve seen the 65% target – until very recently the target has focused on ‘half the crop’. I also don’t think you need to know anything about Cote d’Ivoire to know that for a country to go from processing 35% of a 1.5 million ton crop to 65% in the space of 12 months, or for the world’s second biggest cashew nut exporter to go from 14% processing to 100% in 12 months requires a massive leap forward.

As far as I can see there’s no such policy/investment in place for a giant leap. If the figures change by more than 5% percentage points in the next 12 months I’ll be surprised. For regular Cote d’Ivoire watchers, it looks like the advertisement is playing a bit fast and loose with what’s realistic. I suppose for most though, it will just look impressive.

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