Heading for bust?

The financial system in Côte d’Ivoire, West Africa’s second-biggest economy after Nigeria, is grinding to a halt after an exodus of international banks amid continued political chaos.

The wave of bank closures has sharpened the barbs that continue to fly between the camps of Laurent Gbagbo and Alassane Ouattara, who both claim the presidency after the 28 November presidential election.

Guillaume Soro, prime minister to internationally recognized leader Ouattara, said Gbagbo’s pinning the blame for the closures on Ouattara then attempting to take over the banks makes no sense. Speaking to reporters in the Senegalese capital Dakar on 17 February, Soro dismissed Gbagbo’s arguments as “propaganda”.

“We’re talking about private banks here,” Soro said. “No government has authority over a private bank. The commercial banks are closing because banks don’t like Kalashnikovs; money doesn’t like disorder. When Gbagbo goes to the West African Central Bank [BCEAO] in Abidjan with tanks and Kalashnikovs, he cannot but trigger bank closures…Cash flow is halted. Banks have no money. They must close.”

Gbagbo seized BCEAO after the central bank said it would no longer honour his signature.

Soro said:  “It’s Gbagbo who has created this situation of chaos in Côte d’Ivoire, with his scorched-earth tactics. He wants to dismantle the country, tear apart the foundation of the economy – a foundation he didn’t even help build – and that’s what’s dangerous.”

Standard Chartered Plc was also amongst the first banks to go, much criticised by Gbagbo’s ministers for “disloyalty”. The decision by BNP Paribas’ local affiliate, BICICI, to close on 14 February was the first in a wave of departures.

Citigroup Inc., Access Bank and Société Générale, SA (SGBCI) have closed, citing security concerns for their staff. Bank Atlantique Côte d’Ivoire, the country’s second-biggest bank, has also suspended its operations.

The Gbagbo camp has played down the banks’ pull-out, pledging to keep the financial system going.

Meanwhile Gbagbo’s Justice Ministry has promised “judicial proceedings” against BNP and Citigroup for closing down “illegally”, while Gbagbo Budget Minister Koné Katinan said the French-owned BICICI had reacted in a “purely criminal and racist manner”.

Katinan told reporters the salaries of some 25,000 civil servants would be paid at the end of the month as normal.

Still waiting

Some civil servants said they were still waiting for last month’s pay. “The money was paid into our accounts but we weren’t able to withdraw it,” Leontine Adessa, a teacher in Abidjan, told IRIN. “I’m struggling to meet payments as it is; frankly it will be a miracle if we are paid this month’s salary."

In the heart of the business district, on a road nicknamed 'Rue des Banques', soldiers guard the regional stock exchange, the Bourse régionale des valeurs mobilières or BRVM. The sleek building has been closed since security forces stormed it on 8 February.

“One of the soldiers asked for money, as if we keep money lying around in sacks,” a trader who requested anonymity told IRIN. “They have no understanding of the financial situation and it worries me that they’re now going to be running the system.”

Diplomats said the Gbagbo government’s seizure of the banks would have no impact on its ability to gain funds so long as the country remains cut off from the regional central bank, BCEAO. "It's hard to fathom what this move was trying to achieve,” a western diplomat told IRIN. “The only impression is one of panic within the ranks. Government functions have become increasingly worse in the last few weeks, and salaries need to be paid.”

Gbagbo’s Communications Minister, Ouattara Gnonzié, told reporters in Abidjan the government would ensure the financial system continued to run “smoothly”, but gave no details of how gaps in management would be plugged.

An Abidjan-based independent observer said requisitioning banks was a sign of “blind panic” that would “shift the momentum towards [Alassane] Ouattara’s side if he can seize it”.

Citizens wonder where it could all lead. “We haven’t heard from Ouattara for a while now. It’s discouraging. It doesn’t make you want to take to the streets if your leader isn’t visible,” said Touré, a travel agent. Prime Minister Soro has called on Ivoirians to mobilize and march to force Gbagbo out. "But maybe the African Union will now see that this crisis has to be resolved. Maybe, if there's no other way out, Gbagbo will now be willing to cut a deal."

As the financial gamesmanship continues, the faces of bank employees and their customers show a mixture of anger and anxiety as they react to the closure of bank after bank.

Martial Aka, who works at SGBCI, has shut himself away at home in the middle-class neighbourhood of Cocody for over a week. “When we were told the bank was closing, we had all got through a month’s salary with the hope of seeing our institutions re-opening as quickly as possible,” he told IRIN. “But listening to these announcements of a state take-over, I feel completely crushed.” Aka gets regular news from his colleagues through phone calls or e-mails.

“We know our jobs are already under threat,” said Cathérine Kouassi of BICICI. ”I think first you have to find out where you stand and then go back on the job market, which is difficult.”

A mother of three, living in the Angré district, Kouassi for now does not see herself leaving her four-room home. “But in two weeks time, the whole family must sit down and look at our plans. I could see myself going into business with a colleague. It is not as if we have officially been shown the door, but there are clear signs that that is what will happen.”

Fabien Koné, 32, an analyst at SGBCI, he has been in the post – his first job – for only two years. “We will be the first to be let go in this kind of situation,” he said. “And it’s not as if I have the kind of money to hand to start up some kind of business venture on my own. But I do still have a glimmer of hope. One has to think that everything can be brought back to normal as the government has said so that jobs can be saved.”

Cash limits and insecurity

For bank customers it’s a question of joining the long queues that form every day in front of those ATM machines that are still working. But the top limit of 50,000 CFA francs (around US$100) imposed on withdrawals has caused a lot of grief. “My mother has just gone into a clinic with serious attack of malaria. How am I meant to sort out the bills with that kind of money?” said Amadou Kéita, a teacher from Agboville, just north of Abidjan.

At a nearby cash machine Caroline Tagny, who sells fabrics, inserted her card only to watch it pop out again. “It’s unbelievable,” she moaned to herself. She told IRIN: “I don’t have any hope left for now. I have to take care of the expenses for the week and get food on the table, but I don’t have a centime to my name.”

Every Thursday Tagny comes to the bank for money to cover her weekly expenses, but cash has dried up. “I will have to borrow, but from whom? Everybody is caught up in the same situation so I really don’t see who can get me out of this.”

While a great many bank customers have no more access to their accounts, even those who are able to withdraw money face problems. “There are customers who take out all their money to keep it at home,” Ivoirian economist Alain Béda explained. “But they run the risk of paying a dear price in the current context of growing insecurity.”

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