The Extent and Quality of Infrastructure
The transportation side of infrastructure is about half of what the world average is, far below what is expected of a developed country. The kilometers of surface area of the road is .25 when the world average .46 and only .02 of those .25 km are paved. With such a poor network of roads it is difficult for transportation within the country to occur and so different parts of the country are very different, because they are not able to spread the wealth. Also, people are not able to travel except between major cities so it creates a large barrier between developing world and the more developed.
Energy production is about 5 billion kilowatts when the world average is about 19000 billion kilowatts. This is again showing how separated the poor are from the developed world, they do not even have access to the basic necessities of running water or electrical lighting, which puts them at a huge economic disadvantage, because they need to spend a lot more time providing necessities for the family instead of actually economically improving the country and themselves. The government, which has taken its views away from the people especially during the civic war and war with the neighboring countries has failed to bring these necessities to the people even about 4 years after the wars. The government is also highly indebted, which I will talk about later on, so it has no money to start up projects that will increase energy production and infrastructure in general. What the government must so first is put the people in power that actually have the well-being of the whole population in mind and then actually find a way to bring infrastructure to the country, because that is the only way economic growth has a chance to increase.
Energy production is about 5 billion kilowatts when the world average is about 19000 billion kilowatts. This is again showing how separated the poor are from the developed world, they do not even have access to the basic necessities of running water or electrical lighting, which puts them at a huge economic disadvantage, because they need to spend a lot more time providing necessities for the family instead of actually economically improving the country and themselves. The government, which has taken its views away from the people especially during the civic war and war with the neighboring countries has failed to bring these necessities to the people even about 4 years after the wars. The government is also highly indebted, which I will talk about later on, so it has no money to start up projects that will increase energy production and infrastructure in general. What the government must so first is put the people in power that actually have the well-being of the whole population in mind and then actually find a way to bring infrastructure to the country, because that is the only way economic growth has a chance to increase.
Financial Services/Banking Systems
The banks are all run by the government despite Ivory Coast taking part of the 1980's privatization from the SAP's required to get funding to get out of debt. The most recent time that exemplified how the government runs the banks and how it is more of a political system instead of a financial system is in 2011 when the current president, Ouattara shut down the banks for one month to get the existing president at the time out of power.
The Ivorian currency is pegged to the Euro and even thought the CFC franc has made it through 60 years speculators are worried that the currency could crash now that the Euro is also on the downfall. The Ivorians rely much on the Euro, because if the exchange rate goes down there will be inflation and that will create less imports and less trading, because the Ivory Coast will not be able to afford as much as before. The best thing for the Ivory Coast to do is to have its own currency that is not pegged to the Euro, because that way they can control the exchange rate depending on the needs of their own people instead of relying on how Europe changes.
The Ivorian currency is pegged to the Euro and even thought the CFC franc has made it through 60 years speculators are worried that the currency could crash now that the Euro is also on the downfall. The Ivorians rely much on the Euro, because if the exchange rate goes down there will be inflation and that will create less imports and less trading, because the Ivory Coast will not be able to afford as much as before. The best thing for the Ivory Coast to do is to have its own currency that is not pegged to the Euro, because that way they can control the exchange rate depending on the needs of their own people instead of relying on how Europe changes.
Legal System
Moving to a rural land tenure regime that is not ruled by custom, but instead by statue is a problem. The Rural Land Law was adopted in 1998, but is not used and is not know about throughout. What happens, because land is never legally claimed is that the local populations has constant disputes over it. The land is not being used to the most extent, and because of the the economy suffers, because of the productivity of the rural land. There is not much foreign investment in the productivity of the land, because it is so unstable. Property rights are at the basis of a strong economy, because the people need to be able to have the land and get the full use of it without it being taken away from them. The old land system made for a "winner take all" system where there was no judicial system implemented, but now under the Rural Land Law a judicial system will be put in place and tried to be enforced so that individual rights and social cohesion can be supported.
The Rural Land Law also creates more rules for land preservation as Cote d'Ivoire is starting to struggle with unstable farming practices, deforestation, and loss of biodiversity. Farmers need more training on how to handle the land so that it can last longer and the land actually becomes more useful in the future for other crops and natural resources instead of destroying it.
A theory believed is that commercialization of agriculture will lead to individualization of land rights which is good, because it will create more jobs and also make better use of the land. A tactic like this needs to be brought into the Ivorian system, but because the property rights problem is so large and there are no institutional barriers there is no investment and so the system is at a standstill. When the government implements the laws more then it will attract more investment which will hopefully lead to more property rights and in the long run economic growth and development.
The Rural Land Law also creates more rules for land preservation as Cote d'Ivoire is starting to struggle with unstable farming practices, deforestation, and loss of biodiversity. Farmers need more training on how to handle the land so that it can last longer and the land actually becomes more useful in the future for other crops and natural resources instead of destroying it.
A theory believed is that commercialization of agriculture will lead to individualization of land rights which is good, because it will create more jobs and also make better use of the land. A tactic like this needs to be brought into the Ivorian system, but because the property rights problem is so large and there are no institutional barriers there is no investment and so the system is at a standstill. When the government implements the laws more then it will attract more investment which will hopefully lead to more property rights and in the long run economic growth and development.
Political Stability
"Côte d’Ivoire still faces significant threats to its long-term stability, including the presence of armed elements, transnational crime, terrorism, piracy, and a security sector in need of reform," a UN peacekeeping official said today. There is the existence of networks of programs that aim at destabilizing the government. The UN pushed very much for a non-violent and fair election in 2010, but when the new president won the old president, Mr.Gbagbo, refused to step down until April of 2011. The Ivorian government is still stressing that the UN remain in the country to help with political stability. The nation was split in 2002 when there was a civil war and that was when the UN stepped in the try and preserve political stability. Since then the Ivorian government has failed to recuperate, even thought they have ended the civil war the country is still at unrest. The UN Operation in Cote d'Ivoire (UNOCI) is stressing the protection of civilians, demilitarization and stopping land conflicts. In the past Ivory Coast has gotten many attacks from their border countries such as a recent one by Liberia; they tried to handle these attacks with more military action. Recently the UN has encouraged getting to the roots of the problem, which is actually having discussions with other governments and figuring out agreements so that violence can be prevented.
When political stability is so low as is it at the moment in Cote d'Ivoire it takes away from saving money for economic advancements, because so much needs to be spent on protection and militarization. If Cote d'Ivoire is able to solve more problems diplomatically they will lead to economic development in the future, because more money can be put back into actual development and growth.
The election in 2010 that was a big turning point in relations with the United States. The United States wanted the old president to step down,because he was going beyond what the U.S saw as a trading partner with them. The old president started trading with China and also Russia, which the U.S advised him about and then after that during the election the U.S became huge advocates for Ouattara to become president even though it is suspected that he might have used illegal political strategies to win the election also. The U.S want to use the newly discovered oil reserves towards their own profit and this is causing political instability in the country, because instead of having a democratically stable system and president the U.S is using it as a puppet government.
When political stability is so low as is it at the moment in Cote d'Ivoire it takes away from saving money for economic advancements, because so much needs to be spent on protection and militarization. If Cote d'Ivoire is able to solve more problems diplomatically they will lead to economic development in the future, because more money can be put back into actual development and growth.
The election in 2010 that was a big turning point in relations with the United States. The United States wanted the old president to step down,because he was going beyond what the U.S saw as a trading partner with them. The old president started trading with China and also Russia, which the U.S advised him about and then after that during the election the U.S became huge advocates for Ouattara to become president even though it is suspected that he might have used illegal political strategies to win the election also. The U.S want to use the newly discovered oil reserves towards their own profit and this is causing political instability in the country, because instead of having a democratically stable system and president the U.S is using it as a puppet government.
Extent of Corruption
The Ivorian people have been striving for the government to do something about its corruption problem so that they can finally obtain aid. The government, since the new president came in in 2011, has been trying to make more laws against black markets and corruption, but the laws have many loop holes and so are very susceptible to corruption. There are many dealing done with money that should be going back to the people under the table and that is increasing poverty rates when they should be dropping. Cote d'Ivoire is 38th out of 49 African countries in corruption ratings and they cannot obtain aid until they find a way to improve. Also, because of the corruption more money is leaving the country hurting other economic figures. So when there is no aid and also limited money from the government going back into the economy it creates a problem with the saving deficit so there is less infrastructure, schooling and health as a result. What corruption really does, which is the major concern for the long-run, is that it gives less security for the people and when the people are against the government it creates instability for the whole country. The instability creates economic breakdown, because the poverty levels do not increase and the standards of livings for the majority decrease while it is evident that the top percentages of people get richer. Another problem that Ivory Coast is working on fixing is increasing prosecution time so that cases can be fully looked at by judges and more crimes will be charged so the government can be rid of the people creating the corruption.
The corruption is also creating a negative effect on neighboring countries, because the black market spreads to other parts of the world and infiltrates developed countries as well.
The corruption is also creating a negative effect on neighboring countries, because the black market spreads to other parts of the world and infiltrates developed countries as well.
IFC and Mastercard Foundation Project
The project is focused on giving financial services, primarily banking services, to people in Cote d'Ivoire in an effort to fight poverty. In Ivory Coast about 90% of the population has mobile phones, but only 14% have access to financial services; what the project is attempting is to provide mobile financial services to that 90% of the population. The companies held a workshop for management in finance in 12 different financial institution promoting the idea of giving the people this opportunity in order to decrease poverty through a new form of banking. What mobile banking can do is accelerate the reach for financial services to the poor, because with so little infrastructure such as banks the poor are the last to get financial assistance so phones and financial services will give poor a better opportunity to succeed. The IFC is working with financial distributors across the country to try and get these services as soon as possible, because the goal is to get 5.3 million people.
My giving people micro-financial help, as stated above, the government is giving its people an opportunity to create more development by themselves instead of getting help from international businesses for employment and other opportunities, the people can start the businesses themselves once they are given the chance to save their money and develop a plan for it. Hindering business opportunities by not giving opportunities to the poor will slow down the development of the country as a whole.
My giving people micro-financial help, as stated above, the government is giving its people an opportunity to create more development by themselves instead of getting help from international businesses for employment and other opportunities, the people can start the businesses themselves once they are given the chance to save their money and develop a plan for it. Hindering business opportunities by not giving opportunities to the poor will slow down the development of the country as a whole.
Emergency Urban Infrastructure Project
What this project's aim is, is to improve the service and quality of infrastructure in different cities in Ivory Coast such as Abidjan and Bouake. The selected cities are cities that are important to Ivory Coast's survival, because of their population and location so by making these cities better the hope is to impact as many people as possible. 57% percent of the money is planned to go to urban services and housing for the poor. What this does is it decreases the inequality gap, because it gives the poor a chance to create a living for themselves if they don't have to focus on finding a home anymore and getting basic public necessities. The total project is $50 million which is a funded by the World Bank and other non-bank sources in the U.S. The Ministry of Urban Development is the agency that the money goes to and they get to implement the changes to the different cities. The project was started in 2010 and it continues to be funded, because infrastructure takes a period of time to be built, but the hope is that the well being of individuals increases leading to economic growth.
Trade Barriers
"The NGO recommended that companies “press for all cocoa institutions accounts to be audited and published as a way of ensuring that levies paid by exporters are not contributing to financing the conflict”. This is a statement from greenleft.org talking about how recently and also in the past the government has used profits from their leading cocoa exporting industry to the war effort for the North as they fight against the South. This has created a trade barrier, because less countries are now willing to import the cocoa, because they are afraid that the money will be going towards the war effort instead of the actual economy of Ivory Coast. The article also talks about how this is some of the worst human rights violations that are happening in Ivory Coast, because the cocoa industry has about 23 million stolen from it each year by the government to go towards the war effort and that creates abuse for the workers, mistreatment, little to no pay, and in some cases child slavery. This is almost cutting access to international markets, because the demand for the cocoa has fallen, because the countries do not want to feed the civil war.
In 2012 there was a large increase in the price for cocoa, because the crop did not have a good season. What happened is that since cocoa is so inelastic since the supply shifted down the prices went up, because demand increased. Not as many people were able to buy cocoa and so prices kept on increasing and Ivory Coast was not bringing in as much money for their exports. This is a large risk that Ivory Coast must take each year, because they are so dependent on cocoa exports. Diversification is one of the trade strategies being pushed by the World Bank, because it is the only way to lower the annual risk for a bad crop season on the GDP and economy. Price volatility is large on how the government can also plan for the rest of the year, because when 40% of the export income comes from cocoa, then that will also decide how much money the government has for spending discretion that year.
In 2012 there was a large increase in the price for cocoa, because the crop did not have a good season. What happened is that since cocoa is so inelastic since the supply shifted down the prices went up, because demand increased. Not as many people were able to buy cocoa and so prices kept on increasing and Ivory Coast was not bringing in as much money for their exports. This is a large risk that Ivory Coast must take each year, because they are so dependent on cocoa exports. Diversification is one of the trade strategies being pushed by the World Bank, because it is the only way to lower the annual risk for a bad crop season on the GDP and economy. Price volatility is large on how the government can also plan for the rest of the year, because when 40% of the export income comes from cocoa, then that will also decide how much money the government has for spending discretion that year.
Trade Strategies
One program lead directly by the World Bank is a program that will directly liberalize trade in an effort to improve road infrastructure decrease delays between trades, also to improve delivery times and cut violence and robbery rates across the western Africa trading bloc. Ivory Coast is a large part of the cause, because it was a country so rich in resources and a great economy in the past, but now with the war and the political instability it has died down and has not been such a factory in the Western African trade bloc. This initiative lead by Anca Dumitrescu (A Romanian), World Bank Senior Transport Specialist and Project Manager, is set to increase the trading between the nearby trading bloc of Ivory Coast. This initiative will also lower inventory costs and storage costs in hopes of increasing trade.
The World Bank is now also leading another initiative to end Ivory Coast's dependence on the cash crops export of cocoa and coffee. The impact of changing the export industry will happen through increasing actions to support producers and exporters by giving aid as it is known in the short-run there could be damage to the economy, because it will take a while for facilities to be built and for the farmers to abandon the old methods and adapt to the new. There needs to be product development and quality control in upgrading the export facilities to adapt to the changes in the export markets. The World Bank also hopes to give the Ivorians involved to develop business relationships so they can more easily export without having to deal with as many cultural, national and international trade barriers. This project is still ongoing, because it is hard to go into the country and make these changes. The government has developed a large dependency on 40% of their exports being from cocoa, this is a large portion of the economy that cannot be easily replaced so the government is timid in undertaking a new challenge. This product diversification would help the economy in the long run, because it would preserve this crop for longer.
The World Bank is now also leading another initiative to end Ivory Coast's dependence on the cash crops export of cocoa and coffee. The impact of changing the export industry will happen through increasing actions to support producers and exporters by giving aid as it is known in the short-run there could be damage to the economy, because it will take a while for facilities to be built and for the farmers to abandon the old methods and adapt to the new. There needs to be product development and quality control in upgrading the export facilities to adapt to the changes in the export markets. The World Bank also hopes to give the Ivorians involved to develop business relationships so they can more easily export without having to deal with as many cultural, national and international trade barriers. This project is still ongoing, because it is hard to go into the country and make these changes. The government has developed a large dependency on 40% of their exports being from cocoa, this is a large portion of the economy that cannot be easily replaced so the government is timid in undertaking a new challenge. This product diversification would help the economy in the long run, because it would preserve this crop for longer.