The problem centers on whether the body will continue following the unwritten rule that stipulates the bank’s director be an Ivorian national. This backroom decree was initially determined by Felix Houphouet Boigny and Senegal’s Leopold Sedar Senghor, going back roughly forty years when Cote d’Ivoire made up a super majority of the region’s GDP.
A bold move
Today, after war has sent Cote d’Ivoire’s economy – and political power – into decline, some members are quietly questioning the agreement. The politics of war aside, the major problem of some governments is Cote d’Ivoire’s choice for the bank’s head, Antoine Bohoun Bouabré.
Gouahinga points out the issues surrounding Bohoun Bouabré’s appointment.
The only state minister in the Ivorian cabinet, Bohoun Bouabré is a former economics professor at the University of Abidjan. Critics blame him for the decline in domestic production of cocoa and coffee, the nation's top export commodities. As finance minister from 2002 to 2005, he oversaw the reforms that many now say have resulted in more bureaucratic hassles for producers, prompting the emergence of a parallel market.
Others view his close relationship with the president as a liability. They say Bouabre, who is also Gbagbo's campaign manager in his hometown, may not survive as BCEAO governor should the president lose the upcoming election. Yet others point to the fact that unlike previous governors, Bouabre did not rise from the ranks of BCEAO.
The story points out that no formal opposition to the Bohoun Bouabré appointment has been formed. However, for Ivorian President Laurent Gbagbo, who was at the government helm when the African Development Bank left Abidjan for Tunis, this appointment has become a matter of pride. If other governments balk at Bohoun Bouabré, Gbagbo has threatened to pull out of the union, taking with him his country’s estimated 32 percent of the bank’s reserves.
So, what is the BCEAO?
As a central bank, BCEAO lends money to other banks and financial institutions working in the West African monetary union. It grants assistance to banks working within member states, like providing advances on government securities and it deals with loans through their purchasing, selling or discounting.
Among other things, the bank is responsible for organizing the CFA monetary market and acts as a central storage unit for payment transactions. Also the bank maintains a statistics database on the finances of member nations.Sticky fingers
Bohoun Bouabré’s problem of legitimacy is much greater than the AllAfrica.com story points out. A recent report detailing how the adversaries in Cote d’Ivoire’s civil war illegally appropriated the profits from the country’s cocoa harvest to enrich its leaders and continue the war effort. Should it surprise us that Bohoun Bouabré’s name is all over that report?
According to Global Witness, the London-based NGO tracking the exploitation of natural resources to fuel conflict and the report's author, soon after the Gbabgo government was elected in 2000, four separate cocoa institutions were created mainly to funnel monies to various presidential-controlled funds. These new institutions (another was created just before Gbabgo’s electoral victory) were financed by new cocoa and coffee levies, controlled by the ministers of agriculture and finance. However, the European Union found the levies charged were more than sufficient to cover running the institutions.
According to the report, called Hot Chocolate: How Cocoa Fuelled the Conflict in Cote d’Ivoire:
In 2006 the UN Panel of Experts on Côte d’Ivoire found a contract between the government of Côte d’Ivoire and an unnamed company revealing that for the 2005-2006 cocoa harvest, some exporting companies had paid at least US$20m in advance for the DUS. [The largest European cocoa exporter working in Cote d’Ivoire] Tropival confirmed that in 2005-2006, advance payment had been requested from all exporters. The person representing the state of Côte d’Ivoire in this contract was the then finance minister, Paul Antoine Bouhoun Bouabré. The use of the money raised is not known.
In another incident, Global Witness found that until 2003, the money collected from the cocoa levies was deposited in several bank accounts, mostly at BCEAO headquarters and the state bank of Cote d’Ivoire, the CAA, the acronym for the Caisse autonome d’amortissement. In October 2002, a transfer was made at the CAA totaling 10 billion CFA (around $19 million) from instructions by finance minister, Paul Antoine Bouhoun Bouabré and agriculture minister, Sébastien Dano Djédjé.
The funds from this account were lent, at 6.5 percent interest, to the Ivorian government for the “war effort,” Global Witness found. These funds were moved into an account held by the presidency’s financial services, also within the CAA. The loan was supposed to be reimbursed within 12 months, but it is not clear if the payment was made. The report states:
Between 28 November and 19 December 2002, under the instructions of the same two ministers, six transfers for a total of a further 10bn CFA were made from the same CAA account to an account held by the FRC, also at the CAA. Global Witness received a copy of a letter dated 26 November 2002 addressed to the CAA, signed by both ministers, asking the head of the CAA, Victor Jérôme Nembéléssini-Silué, to organise the transfer of this money. A letter from the FRC authorised the transfer of the 10bn CFA to the presidency’s financial services account, also at the CAA.
However, the UN Panel of Experts investigating Cote d’Ivoire’s economy during the civil war claimed the 10 billion CFA loan and the second 10 billion CFA “gift” directly contributed to the government’s expenditure on security and national defense. According to Global Witness:
It is likely that in the case of this loan and gift, the government simply appropriated the money and that the cocoa institution to which the funds belonged, the FRC, acted as an intermediary or a cover. Through the signature accounts, the government already controlled money from the cocoa trade, as the finance minister and the agriculture minister were the only official signatories.
Finally, the group reported that in April 2002, Bouhoun Bouabré opened a new account at the CAA, and filling it by moving 31.9 billion CFA ($61.6 million) from the BCEAO account. The state auditing administration stated that the Ivorian government had no claims over the BCEAO account and should not have moved it to the CAA. Bouhoun Bouabré claimed it was moved because CAA paid a better interest rate.
Three strikes and you’re out
I am no lawyer, but for those keeping score, these accounts seem to amount to more than a few instances of money laundering, bribery and just plain old corruption. Even looking past the extremely questionable politics of the Gbagbo regime, these policies carried out by Bouhoun Bouabré not only prolonged the war in Cote d’Ivoire, but hurt cocoa farmers (by lowering the price paid for cocoa) and generally brought even more harm to the admittedly weak Ivorian economy.
Part of me doesn’t know whether to laugh or cry at Gbagbo’s audacity for appointing such a blatant stool pigeon for an important post. To me, there is no doubt that Bouhoun Bouabré would sully the bank’s solid reputation and perhaps even threaten its independence. Is such a person worth the destruction of the West African money union, which most likely will result if Gbagbo takes his country’s money and runs? My hope is that a compromise can be reached. The AllAfrica.com story points out an Ivorian daily has already published a shortlist of possible alternative candidates.
If no compromise can be found – and when has Gbagbo ever carried through on a compromise of any sort? – what happens next may be of great importance to the fragile economies of the world’s poorest region. Stay tuned.