Interview: Laureen Kouassi-Olsson
What are the strengths inherent to the local market that have historically attracted foreign investment?
LAUREEN KOUASSI-OLSSON: Côte d’Ivoire is a competitive investment destination with a stable currency, longterm visibility and attractive return prospects. Moreover, it is the entry point to UEMOA, a well-integrated economic zone from a regulatory, tax and legal standpoint. As the dominant economy in the zone, the country offers regional investment opportunities, a factor that has fostered local companies’ long-term expansion.
Côte d’Ivoire has the potential to transform itself into a financial centre that can attract international capital in much the same way as destinations such as Morocco, Mauritius or South Africa have. To do so, it will be critical to reform the fiscal framework to create attractive regimes for fund managers and investors.
To what extent can private equity foster growth in Côte d’Ivoire’s capital markets?
KOUASSI-OLSSON: Private equity has an important role to play in fostering private sector growth. Financial debt is not the most appropriate financing tool to support long-term growth prospects, as interest and principal repayments on such an investment hamper the ability to finance expansion projects, capital expenditures and external growth opportunities. Instead, private equity is a powerful tool to strengthen a company’s capital position as it decreases indebtedness, laying the foundation for robust, organic and external growth. Additionally, managers of private equity funds can structure investment vehicles in a way that attracts liquidity from local and regional institutional investors that can be reinvested in the private sector. Private equity is also an alternative investment asset class for institutional investors who lack a variety of long-term investment instruments that offer high returns.
Private equity can be a key driver of the local stock market, as it provides fund managers with an exit option from investments at the end of the holding period. Private equity can help foster further activity in the primary market, should fund managers use it as their preferred exit route. An increase in private equity activity will bring more opportunities in ancillary services to manage these vehicles, stimulating activity in the audit, tax and corporate governance segments. This will enable the creation of a financial ecosystem supporting further capital markets expansion.
Which measures should be taken to attract international investors to Côte d’Ivoire?
KOUASSI-OLSSON: Africa is home to 54 countries, all of which are potential destinations for foreign investment. Investors look to factors such as economic growth, monetary and political stability, and long-term prospects when choosing a country in which to invest. Côte d’Ivoire is a leader in all three criteria, with economic growth among the strongest in West Africa, and a stable currency. There is room for improvement in education, which would build local expertise. It is also important to harness local production capabilities, especially in light of increased electricity from renewable sources. Further investment is needed in infrastructure to better facilitate the circulation of goods within the country and between UEMOA members.
How could the proposed ECOWAS single currency facilitate regional integration?
KOUASSI-OLSSON: Côte d’Ivoire’s greatest competitive advantage is its stable currency, which encourages higher levels of household consumption, savings, private investment and long-term economic growth. UEMOA countries use the CFA franc and are similar in their macroeconomic drivers and cycles. However, a shift to a single currency in ECOWAS will be challenging, as there are no common macroeconomic drivers in the countries constituting the monetary union, and it could entail volatility. It will be paramount to ensure this currency, the eco, guarantees long-term monetary stability.
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