VIII. TRADE AND PROJECT FINANCING 1. The Banking System The C te d'Ivoire is a member of the Communaut Financi re Africaine, a financial grouping of Francophone African countries. Within that grouping, it belongs to the Union Economique et Monetaire de l'Afrique de l'Oeste (UEMOA). The BCEAO is the central bank, located in Dakar, is the central bank for all seven UEMOA members. The currency issued by the BCEAO, the CFA franc, is convertible against the French franc at a rate of 100:1; convertibility is guaranteed by the French Treasury. There are 11 commercial banks in operation and they are listed in rank order with their U.S. correspondents in Section 6 below. A small stock exchange, over 30 insurance companies and the African Development Bank are headquartered in Abidjan. The World Bank and the International Finance Corporation also maintain regional offices. 2. Foreign Exchange Controls Affecting Trading Exchange control within the C te d'Ivoire is administered by the Directorate of External Finance and Credit. According to Ivorian law, all exchange transactions relating to foreign countries must be handled by authorized banks or the Postal Administration. If an imported item has a value in excess of approximately USD 900 (CFA 500,000), the transaction must involve an Ivorian bank. Transactions involving goods valued at less than this amount must be handled by an authorized Ivorian bank if a financial transaction is to be undertaken before customs clearance. Import licenses or import attestations allow importers to purchase any necessary foreign exchange, but no earlier than eight days before the scheduled shipment of the goods. All foreign exchange to be used for import payment must be purchased either on the date of settlement specified in the commercial contract, or at the time when the required down payment is made. French franc based-transactions are the easiest and most common. Dollar-based transactions take longer. The fees associated with processing exchange transactions are high and vary slightly between banks. The required import license for goods valued at USD 45 (CFA 25,000) f.o.b. or more is also an authorization to remit payments for imports denominated in other currencies. 3. General Financing Availability Commercial lenders tend to lend against collateral, not prospective income and cash flow. Financing is generally available for short term, (one year or less) private sector projects. Prior to the devaluation, lending was highly restricted and loan rates were high (18% interest); in an effort to control the inflationary impact of devaluation, rates have since risen even higher. Since the devaluation, flight capital has returned and the liquidity within the system has increased substantially; however, few loans have been made due to limited opportunities, high interest rates, repayment concerns and apprehension that the Ivorian government has yet to address the huge public debt. Consequently, it is the general rule that medium to long term public sector projects are financed by multilateral lending institutions such as the World Bank or the African Development Bank or by European foreign aid programs. 4. How to Finance Exports/Methods of Payment Traditional trade finance instruments such as letters of credit, collections, and funds transfer are available to the exporter however, the associated fees are high compared to other regions. If a letter of credit is chosen, the exporter should require an irrevocable, confirmed letter of credit to ensure prompt, reliable payment. OPIC and Citibank are presently negotiating an African Trade Facility of USD 100 million which is expected to be available by September, 1994. The country limit is USD 10 million for the C te d'Ivoire. The USDA's West Africa Regional GSM-102 Credit Guarantee Program provides access to financing for imports of wheat, rice, feed grains, vegetable oil, protein meal, and dairy products. The payment guarantee to the U.S. exporter is for a minimum of 90 days and a maximum of one year. The guarantor bank in C te d'Ivoire is Citibank, N.A. The country limit for C te d'Ivoire is $25 million. 5. Types of Available Export Financing and Insurance For private sector projects, the following Washington-based agencies offer the U.S. exporter financing and insurance programs: International Finance Corporation (IFC), Overseas Private Investment Corporation (OPIC), Export Import Bank of the United States (Exim). In addition to short and medium term loan guarantees, the Exim Bank has a Direct Loan Program that offers foreign buyers medium and long-term loans for up to 85 percent of the contract price at fixed interest rates for the purchase of U.S. capita equipment and services that face officially subsidized foreign competition. OPIC's programs include loans, loan guarantees and insurance products. The U.S. Trade and Development Agency, The World Bank and the African Development Bank offer funds to finance feasibility studies and loans to finance Ivorian government sponsored procurements. 1. The International Bank for Reconstruction and Development (IBRD), a member of the World Bank group makes long-term loans at market- related rates primarily to developing nations. The International Development Agency (IDA), the soft loan window of the World Bank, lends to the poorest of the development countries. Both the IBRD and IDA work to promote broadly based economic growth and frequently focuses on structural adjustment, sectoral reform and individual project lending and operate under the same set of procurement guidelines. Typically the World Bank does not finance the entire cost of a project. Rather, it finances the components of a project purchased with foreign exchange, which on average is about 40 per cent of the total project cost. Each project may cover a wide variety of sectors and can involve anywhere from one to hundreds of separate contracts providing export business opportunities for suppliers worldwide. CONTACTS: U.S. Department of Commerce Liaison to the U.S. Executive Directors Office International Bank for Reconstruction and Development 1818 H. St., NW Washington D.C. 20433 Tele: (202) 458-0118 Fax: (202) 477-2967 Office of Multilateral Development Banks U.S. Foreign Commercial Service U.S. Department of Commerce Room H-1107 Washington D.C. 20230 Tele: (202) 482-3399 Fax: (202) 273-0927 2. The African Development Bank (AFDB), headquartered in Abidjan, Cote d'Ivoire, is an international financial institution created by Africans in 1963 to promote the economic and social development of its member African countries. Founded with initial capital resources of USD 250 million, it has authorized capital today of over USD 22.3 billion. The bank belongs to the African Development Bank Group (ADBG) which also includes the African Development Fund (ADF) and the Nigerian Trust Fund (NTF). The AFDB makes loans to development projects in 51 countries in Africa. The ADB provides development financing on concessionary terms to the poorer African member countries. The NTF was established by the Government of Nigeria in 1976 to assist in the development efforts of the poorer ADB members. The ADFB has 21 non- regional members. The United States joined in 1982. CONTACTS: U.S. Department of Commerce Liaison Office to the U.S. Executive Directors Office African Development Bank Ave. Joseph Anoma 01 B.P. 1387 Abidjan 01, Cote D'Ivoire Tele: (225) 21-46-16 Fax: (225) 22-24-37 Office of Multilateral Development Banks U.S. & Foreign Commercial Service U.S. Department of Commerce Room H-1107 Washington, D.C. 20230 Tele: (202) 482-3399 Fax: (202) 273-0927 6. List of Ivorian Banks and their U.S. Correspondents SGBCI - Societe General de Banque (SGB) BIAO - Credit Commerce de France BICICI- Banque Nationale de Paris (BNP) SIB - Credit Lyonnais Citibank - Citibank Banque Atlantique - Compagnie Financiere du Credit Industriel et Commercial (CIC) et de l'Union Europeenne, New York Paribas - Paribas Barclays Bank - Barclays Bank Eco Bank - none Banque de l'Habitat (specializes in housing) - none BIDI (specializes in lending to small and medium-sized businesses) - none