Letters from Côte d’Ivoire and the Democratic Republic of Congo

June 2023

For insights on investing in Côte d’Ivoire and the DRC, please email Senior Consultants Valentin Robiliard at vrobiliard@africamatters.com and Patrick Edmond at pedmond@africamatters.com.

AML consultants were on the road this month. Senior Consultant Valentin Robiliard was in Abidjan to meet clients and discuss business and politics in Côte d’Ivoire. Simultaneously, Senior Consultant Patrick Edmond was in Lubumbashi for DRC Mining Week, the annual forum for mining professionals in the Democratic Republic of Congo (DRC). In this month’s insight, Valentin and Patrick share their thoughts on their trips, and offer advice for investors operating in, or looking at, the two countries.

Côte d’Ivoire

Key sectors draw investor interest

Traffic in Abidjan these days is bad. It often is as the rainy season rolls in, but it has been particularly tricky recently as motorists have had to navigate a maze of construction sites across the city. From the Akwaba roundabout in Port-Bouët to the fourth and fifth bridges in Plateau, via the Abidjan metro and countless road interchanges, several projects are promising to ease the traffic they are currently exacerbating. And beyond transport infrastructure, construction workers across the city are also busy rehabilitating stadiums, extending water treatment systems, and erecting new hotels and office towers.

Infrastructure development has long been a priority for President Alassane Ouattara, who promised to rebuild the country after exiting a decade of crisis in 2011. As such, the construction sector accounts for four percent of GDP and 10 percent of the workforce today, making it the third largest employer in the country. But beyond rebuilding the country, the government is also banking on better infrastructure to boost other sectors. New exhibition centres and hotels across the city aim to strengthen Abidjan’s business tourism potential, while the country hopes to capitalise on the influx of football fans for the 2023 Africa Cup of Nations to boost its leisure tourism sector. Outside Abidjan, port extensions, new industrial zones, and other infrastructure projects are also promising to support key Ivorian industries.

But there is more to Côte d’Ivoire than infrastructure. Not bothered by Abidjan traffic, the Firenze FPSO arrived in Ivorian waters this month, and will soon start production at Eni’s Baleine oil and gas field. The largest oil and gas discovery ever in Côte d’Ivoire, Baleine could hold up to 2.5 billion barrels of oil and 3.3 trillion cubic feet of gas. When developed, it promises to turn Côte d’Ivoire – a modest oil and gas producer with 30,000 bpd of oil and 88 billion cubic feet of gas in 2021 – into a more significant player within the sector. Eni’s good fortunes will also attract other investors to the Ivorian basin, with US firm Murphy Oil this month securing exploration licences for five offshore blocks. Meanwhile, Côte d’Ivoire is working to ensure it benefits from the oil boom: the government has restructured Petroci into a fully state-owned company, and adopted a new local content law in the hydrocarbons sector.

Beyond petroleum, Minister Sangafowa Coulibaly is also kept busy by his two other portfolios, mines and energy. As global demand for critical minerals grows, the ministry recently awarded licences to companies exploring for cobalt, lithium, and nickel across the country. In doing so, and while continuing to exploit the country’s gold reserves, the government aims to double the mining sector’s contribution to GDP to 6 percent by 2025. To support these efforts, mining code revisions are on the table. Meanwhile, Côte d’Ivoire is keen to remain a leading power producer. Having concluded its Phase IV extension, Globeleq’s Azito plant now provides a fifth of the country’s 2,300 MW installed capacity. And other energy projects are under development, including the country’s first biomass power plant.

Last but not least, agriculture. The sector accounts for 22 percent of GDP and employs 70 percent of the population, driven by crops like cocoa and cashew nuts. But little of what the country exports is transformed locally, and much of the value added is generated abroad. The government is thus pushing to develop the agro-processing industry, through public investment and fiscal incentives. An industrial zone dedicated to cashew processing was inaugurated in Korhogo in mid-June, while a cashew processing plant is under construction in the Akoupé-Zeudji industrial zone outside Abidjan.

But challenges to doing business persist

All these developments mean Abidjan is busy, and Côte d’Ivoire is very much “open for business,” as government officials like to tell investors visiting the city. But investing in Côte d’Ivoire does not come without its challenges. For some, it may be political interference in strategic sectors (e.g. infrastructure, extractives, agriculture), with politically-connected companies favoured via no-bid contracts, restricted tenders or other forms of manipulation. For others, it may be navigating the cumbersome bureaucracy, including complex – albeit improving – taxation frameworks, or long permitting processes in the mining sector. For more remote operators, it may be infrastructure challenges, community tensions, or security concerns stemming from crime or the expansion of Islamist militant groups from the Sahel.

And then there is politics. Since Ouattara’s turbulent re-election in October 2020, gestures towards national reconciliation have provided for a calmer political climate. Capitalising on that climate, and a divided and weak opposition, Ouattara’s Rally of Houphouëtists for Democracy and Peace (RHDP) has strengthened its political supremacy and will likely dominate the local polls scheduled for September. But political tensions remain. With the next presidential election in 2025, it is unclear whether Ouattara, Laurent Gbagbo, and Henri Konan Bédié will yet again fight it out or give the younger generation a chance. But that younger generation is not less combative, with personal egos, rivalries between technocrats and political stalwarts, and other divisions affecting all political parties. Operators in Côte d’Ivoire will continue to have to navigate these political dynamics, understand the impact they have on their government engagements, and prepare for more comprehensive changes around future polls or power vacancies. Luckily, the Abidjan traffic allows for plenty of time to ponder these eventualities.

The Democratic Republic of Congo

Increasing international attention on mineral supply chains

While Côte d’Ivoire is exploring a seat in the energy transition debate, the DRC is already very much at the table. With the country producing 70 percent of the world’s cobalt, and around nine percent of its copper, the world depends on the Congolese mining sector to electrify our economies. Yet, to the dismay of Western governments, China continues to run the show: many mines in the DRC are Chinese-owned, and material enters global supply chains through China.

Western concerns were clearly on display at the DRC Mining Week. Long a byword for conflict and misgovernance, the DRC is no longer a frustrating afterthought, and has become a priority. Contrasting with previous conferences, Lubumbashi this year welcomed large EU and US government delegations keen to engage with the DRC government and the private sector, and work on partnerships to promote Western investment and greater security of supply. Meanwhile, often disinterested by such conferences, and fresh off a major state visit from the DRC’s president to China, Chinese representatives were conspicuously absent from the main stages and events.

Though a site where geopolitical tensions and the energy transition collide, Lubumbashi is still a dusty mining town in the centre of Africa. Roadblocks at night – ostensibly to catch armed thugs – meant guests were often hassled by soldiers. Meanwhile, in a city with only one formal western diplomatic mission – the Belgian Consulate General – many of the lavish receptions were held in honorary consuls’ residences, if not in hotels and bars. And geopolitical ambitions clashed with commercial priorities. Many at the trade fair shrugged their shoulders as they tried to sell big bags, piping, stainless steel kitchens, or safety boots. When will this global interest make a difference? Perhaps when the Lobito Corridor, a string of rail lines to the Atlantic via Angola, is operational?

Taking the drama of internal politics seriously

Global ambitions may have clashed strongest with local politics, a rocky shore on which many international partnerships and initiatives are foundering. In part, the government has other priorities – especially in an election year, and on the week of the president’s birthday. Amid talk of strategic partnerships, Prime Minister Sama Lukonde attended only a joint discussion on resolving grain shortages. The head of the regulator for subcontractors (ARSP) was there with a resolutely domestic mandate and a large entourage. While several ministers were in town, none of the recently appointed vice prime ministers were present, and the presidency sent only one notable official.

Then there is a difference of approach, mentality, and style, which is often snubbed by outsiders. Regardless of who is in town, you can always sense when a prominent Congolese politician is nearby. The most obvious sign is the police. Those at the gates on a normal day are friendly and languid. A different class accompanies senior politicians. They will not crack a smile, and wear spotless tactical uniforms and unusual unit patches, and carry the latest in military gear. Then there are the journalists. Usually roaming or busy, they will wait patiently if there is something worth waiting for.

When politicians arrive, you often hear the rumble of engines first. A common favourite is to roar up to the front of a hotel at high speed, and a final screech of tyres around a corner, coming to a halt in front of the entrance. Guards in well-pressed suits, sunglasses, and earpieces hustle their charge across the threshold. Once politicians take the floor, the room hangs on their every word, but simply being there is perhaps of equal value. Every other speaker thanks them profusely, while time must be taken for photos of every configuration. Then they leave in a huddle, with a small crowd accompanying them for the last stretch to their vehicle. Once they have gone, the atmosphere dissipates as quickly as it gathered.

Some may dismiss this as needless theatre, but they would be wrong. Across the world, diplomacy and politics comes with drama and pomp, and very often it does important work, building trust and demonstrating status. In countries such as the DRC, decisionmakers rely on these displays to retain their positions, which are often highly fragile. If international partners are to secure a stable supply of critical minerals from the DRC for the long term, adeptly negotiating this environment will be vital.