Ivory Coast’s two-day mutiny leaves foreign investors unfazed

Follow 9News Nigeria On Social Media

Mutinous soldiers arrive to speak with Ivory Coast's Minister of Defense Alain-Richard Donwahi in Bouake, Ivory Coast January 7, 2017. REUTERS/Thierry Gouegnon
Social sharing

By Karin Strohecker

LONDON (Reuters) – Soldiers rampaging through Ivory Coast in a two-day mutiny have done little to dent investors’ faith that President Alassane Ouattara will retain control and push ahead with reforms in a country seen as a rare African success story of recent years.

Disgruntled soldiers demanding bonuses and wage rises kicked off a revolt on Friday in French-speaking West Africa’s largest economy. Troops in military camps across the country then joined the mutiny, the second in less than three years in the world’s top cocoa exporter.

The government conceded to the low-ranking soldiers’ demands and agreed to pay bonuses likely to cost state coffers tens of millions of dollars.

Yet Ivory Coast’s dollar-bonds maturing in 2024, 2028 and 2032 – the main exposure point of foreign portfolio investors to the western African nation – have edged down less than a couple of cents across the curve, according to data from Tradeweb.

“There is a great deal of confidence in President Ouattara himself and his ability to manage the country since he took over,” said Jan Dehn, head of research at emerging market focussed asset manager Ashmore.

“But it is also a relatively simple matter: Soldiers had not been paid their salaries for a couple of months, they got pissed off, they went out and caused some havoc…. They paid them the salary, and that is why things calmed down now.”

READ ALSO  Nigeria's "Oil Curse": 'Paradox of Plenty' or 'Poverty of Paradox'?

Ivory Coast emerged from a 2002-2011 political crisis as one of the continent’s rising stars with an economy that has grown by around 10 percent or just below annually in the four years to 2015, according to World Bank data.

It has been praised for structural reforms such as a sweeping overhaul of its cocoa sector and investment in infrastructure. In September, Washington lifted decade-old sanctions against the country citing the successful 2015 presidential election and progress in tackling illegal trafficking of arms and natural resources.

To reaffirm his control, Ouattara dismissed the heads of the army, police and gendarmes on Monday. Prime Minister Daniel Kablan Duncan also resigned and dissolved the government.

The swiftness with which the mutiny was quelled also reassured investors, said Samir Gadio, head of Africa Strategy FICC Research at Standard Chartered Bank.

“What the market sees in Ivory Coast is an improving story in an environment where other Eurobond issuers actually have seen their fundamentals deteriorate in recent years,” he said.

“Investors have been constructive on Ivory Coast, they recognise that fundamentals have improved, that policy making is on track, and I don’t think that one-off event is going to lead to a significant reassessment of the country’s credit profile.”

READ ALSO  Nigeria's "Oil Curse": 'Paradox of Plenty' or 'Poverty of Paradox'?

African governments designated as frontier markets have been keen issuers on international capital markets in recent years, but momentum has ground to a halt amid soaring borrowing costs.

However some investors warn that Ouattara’s failure to rein in the army, cobbled together from rival rebel groups and government soldiers, could threaten economic recovery and political stability.

“This is a very unstable country – both politically and economically. Exports are heavily focused on certain commodities and institutions are very, very underdeveloped,” said Lutz Roehmeyer at Landesbank Berlin Investment.

While he was not looking to add to the small dollar-bond exposure he currently holds, Roehmeyer said having the West African CFA Franc currency pegged to the euro made local debt a more compelling investment opportunity.

Ivory Coast offered a yield of over 5 percent for a CFA issue in December. The government said last year it hoped to develop its local bond market and issue to foreign investors.

“If you look at other countries in Africa that had to devalue dramatically last year such as Egypt, Nigeria, Angola or Mozambique you see they already have dramatic problems and that the currency weakness is yet another issue weighing them down, which Ivory Coast does not have. It is a massive bonus to have a stable currency,” said Roehmeyer.

READ ALSO  Nigeria's "Oil Curse": 'Paradox of Plenty' or 'Poverty of Paradox'?

(Editing by Hugh Lawson)

 

Leave your comment on this post

THE ROTTEN FISH: CAN OF WORMS OPENED OF APC & TINUBU'S GOVERNMENT OVER NIGERIA'S ECONOMIC DOWNTURN

WATCH THE CRITICAL ANALYSIS AND KNOW THE RESPONSIBLE PARTIES TO BLAME FOR NIGERIA'S ECONOMIC CHALLENGES, WHILE CITIZENS ENDURE SEVERE HARDSHIPS.

Watch this episode of ISSUES IN THE NEWS on 9News Nigeria featuring Peter Obi's Special Adviser, Dr Katch Ononuju, 9News Nigeria Publisher, Obinna Ejianya and Tinubu Support Group Leader, McHezekiah Eherechi

The economic crisis and hardship in Nigeria are parts of the discussion.


Watch, leave your comments, and share to create more awareness on this issue.


#9NewsNigeria #Nigeria #issuesInTheNews #politics #tinubu THE ROTTEN FISH: CAN OF WORMS OPENED ...
DON'T FORGET TO SUBSCRIBE AND LEAVE YOUR COMMENTS FOR SUBSEQUENT UPDATES
#9newsnigeria #economia #economy #nigeria #government @9newsng
www.9newsng.com

Leave your comment

Click on the link below or Scan the QR Code to join the 9News Nigeria WhatsApp Channel

9News Nigeria Investigative Reports WhatsApp Channel
9News Nigeria Investigative Reports WhatsApp Channel
About 9News Nigeria 13308 Articles
9News Nigeria is Nigeria's favourite news source. For Authentic, Unbiased News on Politics, Business, Sports, Technology, Entertainment and Lifestyles, Health, Nollywood, Crime and Investigations, Family and Relationships, Inspirations .. and much more. For Latest News from Africa and around the world, 9News Nigeria is your best source. WhatsApp +2348115805632 Email: info@9newsng.com Facebook: www.facebook.com/9NewsNG | Twitter/Instagram: @9newsng

Be the first to comment

Leave your comment