As Côte d’Ivoire powers up, so do its business opportunities
This story is part of a series on IFC’s work to help create markets that give new opportunities to people in developing countries. These innovative approaches have helped solve some of the largest problems in countries or, sometimes, entire regions.
Also available in: French
By Neha Sud, IFC Communications
ABIDJAN, Côte d’Ivoire—When Yannick Assale’s family opened this country’s first medical imaging clinic in 1996, they knew it could be risky because of the frequent power outages. The risk materialized sooner than they thought, just two years later.
“The power fluctuations were so bad that our CT scan and MRI. machines broke down,” said Assale. “No one could repair them. We had to take out loans to buy new machines and a generator.”
But their plans stalled as the country spiraled into a long period of civil unrest and political instability, starting with a coup in 1999. Two civil wars—from 2002 to 2007 and from 2010 to 2011— stopped almost all investment and business growth in Côte d’Ivoire.
A new government emerged in 2012, and put in place regulations to attract investment for the country’s infrastructure. IFC, the World Bank, and other development finance institutions began exploring opportunities.
For IFC, this was a chance to finish a job started two decades ago: a massive expansion of the country’s power supply.
A Landmark Deal
The expansion started in the 1990s, when Côte d’Ivoire decided to privatize the power sector. The International Development Association, the World Bank’s fund for the poorest countries, provided guarantees of $30 million to attract private investors. Those guarantees helped mobilize the finance initially needed to build the Azito and CIPREL (Compagnie Ivoirienne de Production d'Electricité) power plants.
When the conflict ended in 2011, one of Côte d’Ivoire’s top priorities was to fuel economic growth, which leaders knew would fail without a steady and more extensive power supply. The government sought investment to expand the Azito and CIPREL plants. The plants would also be converted to combined-cycle technology, in which exhaust heat from gas turbines powers a steam turbine. This would allow the plants to double power production while using no additional natural gas—important in a country with finite gas reserves.
The latest expansion would cost $700 million, require technical expertise, currency hedges, interest rate swaps, and insurance against political risk. It was a complex package to pull together—beyond the scope of any private investor.
Investors were wary—uncertain about whether the country would remain stable and whether the government’s ambitious plans were realistic.
Ivorian authorities turned to IFC and the World Bank, which decided to take the risk.
First, IFC and the World Bank worked with the government on regulatory reforms that would make it easier to invest in the power plants. Then, IFC invested $250 million in the expansion, and mobilized another $535 million from eight development banks, proving that financing is possible, even a year after conflict.
“IFC played a central role in mobilizing finance for the expansion, and in assuring other investors,” said Marc Alberola, Chairman of CIPREL’s board.
Ciprel and Azito’s expansions were completed by 2016, doubling their total capacity, and reducing brownouts and blackouts. The two plants now account for two-thirds of Côte d’Ivoire’s generation capacity. Although the country’s power sector still has challenges, electrification rates are now close to 56 percent—which places it among the top five nations in sub-Saharan Africa.
For the Assale family, fortunes improved as well—once the conflict had ended and they had a reliable power supply.
“Electricity costs are still high in Côte d’Ivoire, but there have been big improvements in power supply since 2012,” said Assale. “Our business depends fully on electricity, so better power means we can save on generator costs.”
The family’s clinic, La Rosette, has since expanded to three branches, which process more than 100 patients daily. It isn’t the only business to consider 2012 a watershed year.
Côte d’Ivoire’s power boost helped the entire region as well as the national economy. Through the West African Power Pool, several countries are connected to Côte d’Ivoire and benefit from its power exports. Better power supply is especially useful to landlocked countries like Burkina Faso and Mali, which generate electricity through expensive heavy-fuel oil and diesel.
Côte d’Ivoire’s increased power capacity is making a difference in people’s lives. Karim Soumahoro, who owns a company that connects businesses and homes to the power grid, said that everything changed in his suburban Abidjan neighborhood once electricity poles went up in 2013.
“As kids, we used to call this place Les Palmiers, because there was nothing here, but a few houses and palm trees,” he recalled. “We’d go hunting for squirrels in the trees.”
Les Palmiers, now connected to the grid, is today a hub of construction and commerce. Small businesses and homes are mushrooming among the palm trees. The sounds of air conditioning, electric drills, and chainsaws are the clatter of a country powering up.
Soumahoro’s business is booming—he has 50 business clients and delivers power to hundreds of private residences every year.
“Our country has gone through many challenges,” said Soumahoro. “But if there’s one thing that I’ve seen, it’s that where there is light, there is development.”
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Published in February 2018