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Ivory Coast Table of Contents

Ivory Coast

Public Investment

In addition to its planning role, the government was the largest single investor in the economy. Following independence, the government embarked on an ambitious capital spending program. Much of the capital for government intervention came from the CSSPPA, which fixed producer prices, operated a reserve price stabilization fund, and extracted profits for the state. Much of this investment went toward developing infrastructure and was one of the state's more positive economic contributions in the 1960s.

By the 1970s, although there was no official change of economic policy, the state intervened more directly in the economy, primarily through the creation of parastatals. This surge in the number of parastatals reflected the government's desire to stimulate growth in those areas where the private sector was considered insufficiently active, to create employment for Ivoirians, and to encourage Ivoirians to invest locally. In the case of agricultural parastatals, the state wanted to lessen income disparities between the north and the south, decrease food imports, provide rural employment, and diminish the importance of foreign investment in agriculture. In some instances, social or political objectives superseded the profit motive, as appears to have been the case with parastatals like the Bandama Valley Authority (Autorité du Vallée du Bandama--AVB), which promoted regional development, and the Sugar Development Company (Société de Développement Sucrier--SODESUCRE), which was also responsible for creating jobs and building schools and medical clinics in the savanna region.

All of the parastatals enjoyed relative financial autonomy, although their technical and financial operations were in theory supervised by the government. In fact, there was often little supervision by, or coordination of activities with, other government agencies, perhaps reflecting the fact that top-level managers of some parastatals were often politically well connected. In many instances, the parastatals withheld or otherwise could not produce crucial financial data for planners. Given the absence of governmental oversight and the sometimes vague social and political objectives of the parastatals, they performed badly and in some cases--notably the housing sector--were rife with fraud.

In spite of these shortcomings--or perhaps because of them--the government support of parastatals steadily increased. By 1974 it amounted to more than half of the entire investment budget. Over the same fourteen years, the proportion of investment spending covered by net public savings fell to 37 percent. This imbalance forced the government to borrow extensively from foreign sources to maintain an even level of investment and growth. Between 1965 and 1975, foreign loans rose from 41 percent to 65 percent of investment in parastatals. Moreover, the outstanding debt figures of the public enterprises and the amount of foreign borrowing, which in theory should have been cleared by the National Amortization Fund (Caisse Autonome d'Amortissement--CAA), were not disclosed until an end-of-year report. This process effectively precluded government attempts to control parastatal finances.

Data as of November 1988