Policies Towards Foreign Direct Investment

The government actively encourages Foreign Direct Investment (FDI) and is committed to doubling foreign investment over the next several years.  Foreign companies are free to invest and list on the regional stock exchange Bourse Regionale des Valeurs Mobilieres (BRVM), which is based in Abidjan and covers the eight countries of the West African Economic and Monetary Union (WAEMU).  WAEMU members are part of the Regional Council for Savings and Investment, a regional securities regulatory body.

In most sectors, there are no laws that limit foreign investment.  There are restrictions on foreign investment in the health sector, law and accounting firms, and travel agencies.  Although there are regulations designed to control land speculation in urban areas, foreigners own significant amounts of land.  Freehold land tenure in rural areas is difficult to negotiate and inhibits outside investment. Land tenure disputes exist all over the country owing to the lack of formal private land ownership in most areas.  Most businesses, including agribusinesses and forestry companies, circumvent this by acquiring long-term leases. Companies that wish to purchase

land must have the property surveyed before obtaining title.  Surveying is tightly controlled by a small oligopoly of companies, and can often cost more than the value of the parcel of land.

Cote d’Ivoire’s investment promotion agency, the Centre for the Promotion of Investment in Cote d’Ivoire (CEPICI), facilitates foreign investment, and its services are available to all investors.  CEPICI provides its services through a one-stop shop to facilitate business creation, operation, and expansion; requests incentives in the investment code and for access to industrial land; and promotes and attracts national and foreign investments.  More information is available at http://www.cepici.gouv.ci/  .

Cote d’Ivoire maintains an ongoing dialogue with investors through various business networks and platforms, such as CEPICI, the Ivoirian Chamber of Commerce (CCI-CI), the association of large enterprises (CGECI), and the bankers’ association.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign investors generally have access to all forms of remunerative activity on terms equal to those enjoyed by Ivoirians.  The government encourages foreign investment, including in the privatization of state-owned and public firms, although in most cases the state reserves an equity stake in the new company.

There are no significant limits on foreign investment, nor are there legal differences in the treatment of foreign and national investors, either in terms of the level of foreign ownership or sector of investment.  There are no laws specifically authorizing private firms to adopt articles of incorporation or association that limit or prohibit foreign investment, participation, or control, and no such practices have been reported.

Banks and insurance companies are subject to licensing requirements, but there are no restrictions designed to limit foreign ownership or to establish subsidiaries of foreign companies in this sector.  Investments in health, law and accounting, and travel agencies are subject to prior approval and require appropriate licenses and association with an Ivoirian partner. The Ivoirian government has, on a case-by-case basis, mandated using local providers, hiring local employees, or arranging for eventual transfer to local control.

The government does not have an official policy to screen investments and its overall economic and industrial strategy does not discriminate against foreign-owned firms.  There are indications in some instances of preferential treatment for firms from countries with longstanding commercial ties to Cote d’Ivoire.

Other Investment Policy Reviews

Cote d’Ivoire has not conducted an investment policy review (IPR) through the OECD.

A Trade Policy Review was last done by the WTO in July 2012 and can be found at https://www.wto.org/english/tratop_e/tpr_e/tp366_e.htm  

UNCTAD does not provide an IPR report for Cote d’Ivoire, though there are statistics on FDI in the country profile at http://unctadstat.unctad.org/Country Profile/GeneralProfile/en-GB/384/index.html  .

The government of Cote d’Ivoire provides information about sector policies and business opportunities in various reports.  More information can be found at: http://www.cepici.gouv.ci/en/   or at: www.gcpnd.gouv.ci/  .

Business Facilitation

The government has engaged in business facilitation efforts through a series of reforms using the World Bank’s Ease of Doing Business Index as a reference to improve the business environment.  These reform efforts include the acceleration of business creation to 24 hours, the issuing of a construction permit in 26 days, the establishment of a one-stop shop for external trade, and the establishment of a single tax declaration form.  In 2018, Cote d’Ivoire improved its Doing Business ranking from 139th to 122nd place.

Cote d’Ivoire’s online information portal containing all documents dedicated to business creation and registration (https://cotedivoire.eregulations.org/  ) is managed by CEPICI.  All the necessary documentation for registration is available online.  The one-stop shop for business registration takes between 24-48 hours and has all the agencies under a single roof, allowing for a more simplified approach to business creation.  Businesses have noted the one-stop shop has been very successful in speeding up registration.

The registration process is generally equitable toward women and underrepresented nationalities, and there have not been any reports of discrimination.

Outward Investment

Cote d’Ivoire does not promote or incentivize outward overseas investment.  The government does not restrict domestic investors from investing abroad.

There is no bilateral investment treaty between Cote d’Ivoire and the United States in force.  Cote d’Ivoire has signed Bilateral Investment Treaties (BITs) with the following countries and multilateral organizations:  Belgium, Luxembourg, Canada, China, the EU, Germany, Ghana, Italy, the Netherlands, Singapore, Sweden, Switzerland, Tunisia, and the United Kingdom.  The Ivoirian government ratified the Economic Partnership Agreement (EPA) with the EU in September 2016, allowing it to access the European market with no tax.  The EPA is scheduled to go into effect in 2019.

Cote d’Ivoire does not have a bilateral taxation treaty with the United States, though Cote d’Ivoire has concluded tax treaties with Belgium, Canada, France, Germany, Italy, Norway, and Switzerland.  For leasing, the depreciation period of the item is now aligned with the period of the contract and not the lifespan of the item for accounting purposes. A special tax incentive for equipment has been adopted to help business development.

Businesses and foreign investors have expressed some concerns about the level of taxation, but there are currently no U.S. firms involved in ongoing systemic tax disputes.

Transparency of the Regulatory System

The government has taken steps to encourage a more transparent and competitive economic environment, and the IMF, World Bank, EU, and other large donors continue to urge the government to make further reforms.  The government aims for transparency in law and policy to foster competition and provide clear rules of the game and a level playing field for domestic and foreign investors. Transparency of the regulatory system, however, is a concern in Cote d’Ivoire, as companies complain that regulations are issued with little warning and without a period for public comment.

There are no informal regulatory processes managed by non-governmental organizations or private sector associations.

In general, regulatory authority exists at the national level and is the most relevant for foreign businesses.  For most industries or sectors, regulations are developed through the relevant ministry. In the telecommunications, electricity, cocoa, coffee, cotton, and cashew sectors, the government has established control boards or independent regulatory agencies to regulate the sector and pricing.

Cote d’Ivoire’s accounting, legal, and regulatory procedures are consistent with international norms, though businesses often complain about the system’s lack of clarity and the government’s poor communication.  Cote d’Ivoire is a member of the Organization for the Harmonization of African Business Law (OHADA), which is common to 16 countries and adheres to the West African Economic and Monetary Union’s (WAEMU) accounting system.  In accounting, companies use the WAEMU system, which complies with international norms in force and is a source of economic and financial data.

Draft bills and regulations are not published or made available for public comment.  The government often holds public seminars and workshops to discuss proposed plans with trade and industry associations.

Key regulatory actions are published in the Journal Officiel de la Republique de Cote d’Ivoire, and each regulatory body provides regulatory actions (laws, decisions, and sanctions) on its website http://www.sgg.gouv.ci/jo.php  .

The regulatory body, Autorite Nationale de Regulation des Marches Publics (ANRMP), ensures transparency and compliance with administrative processes.  Consumers, trade associations, private companies, and individuals have the right to file complaints with ANRMP to ensure that the government follows administrative processes.

There is no centralized online location where regulatory actions or their summaries are published, similar to the Federal Register.  The website https://abidjan.net/   makes the Journal Officiel available for purchase online.

The U.S. government does not have any knowledge of recent regulatory system, including enforcement reforms, that have been announced since the last ICS report.  Regulatory reforms announced in prior years have been fully implemented, with the goal to create an enabling business environment, foster competition, and build investors’ confidence in the economy.

The regulatory enforcement mechanisms are made available to the public through the private and public institutions tasked with controlling and regulating these sectors.

Regulations are reviewed on data-driven assessments, as regulatory bodies regularly publish and promote access for the business community and development partners to their data.  Quantitative analysis and public comments are made available.

Cote d’Ivoire’s government ensures transparency of public finances and debt obligations (including explicit and contingent liabilities) with the publication of this information through the following websites:

http://budget.gouv.ci/budget/budget-etat  
https://www.tresor.gouv.ci/tres/fr_FR/rapport-de-la-dette/  

International Regulatory Considerations

The Ivoirian government accounts for regional bodies in public procurement by incorporating WAEMU directives into the bidding processes and auditing, as well as into the regulation of public procurement within the WAEMU.  The public procurement code harmonizes public procurement policy and is in compliance with WAEMU directives. Changes include the separation of auditing and regulating functions, the transformation from a national to a regional system of procurement for intellectual services, and an increase from 25 to 30 percent of advance payment for the initial procurement of goods and services.  The ANRMP regulates public procurement with a view to improve governance and transparency. It may sanction entities which do not comply with public procurement regulations.

Cote d’Ivoire’s laws, codes, professional association standards, and regional directives are incorporated in the country’s regulatory system.  European norms are often followed due to Cote d’Ivoire’s free trade agreement with the EU.

Cote d’Ivoire has been a WTO member since 1995 but has not notified all draft technical regulations to the WTO Committee on Technical Barriers to Trade.  Cote d’Ivoire signed the Trade Facilitation Agreement (TFA) in December 2013 and ratified it in December 2015. There have been notable efforts to implement the TFA requisites with the establishment of the TFA National Committee to coordinate its implementation.  Other efforts include the USAID trade facilitation support program, which has helped in the national implementation of the TFA.

Legal System and Judicial Independence

Cote d’Ivoire’s legal system is based on the French civil law model.  The law guarantees the right to own and transfer private property. While this right is respected in most instances, the law regarding rural land tenure makes it prohibitively difficult to do so.  The court system enforces contracts.

Cote d’Ivoire is a signatory to the Organization for the Harmonization of Corporate Law in Africa (OHADA) that provides common corporate law and arbitration procedures for the 16 member states.  The Commercial Court of Abidjan handles business cases. Mediation is also available through the Ivoirian legal framework in addition to the Commercial Court and the Arbitration Tribunal. Following the recommendations of business associations and commercial law experts, in August 2017, the government established the Court of Appeals of the Commercial Court of Abidjan.  The IMF has recommended the creation of other commercial jurisdictions in the interior of the country.

Cote d’Ivoire’s judicial system is ostensibly independent, but magistrates are sometimes subject to political or financial influence.  Judges sometimes fail to base their decisions on the legal or contractual merits of a case and are often seen to rule against foreign investors in favor of entrenched interests.  The greatest complaint from investors is the slow process. Cases are often postponed and appealed without a reasonable explanation, moving from court to court for years or even decades.  With international assistance, the government is making an effort to reform the judiciary system to make it more efficient and transparent.

Regulations or enforcement actions are appealable and adjudicated in the national court system.

Laws and Regulations on Foreign Direct Investment

The major law affecting foreign investment is the 2018 Investment Code.  The code is considered generous as it has no restrictions on foreign investment or the repatriation of funds.  The code offers mixed fiscal incentives, combining tax exoneration and tax credits to encourage investment. There are also incentives to promote small businesses and entrepreneurship, low-cost housing construction, factories, and infrastructure development, which the government considers key to the country’s economic development.  In mining, the 2014 Mining Code allows a period for holding permits for ten years with a possibility to extend for two more years on a limited permit area of 400 square kilometers. The code has spurred investment in the sector.

CEPICI provides a one-stop shop website for investment.  More information on Cote d’Ivoire’s laws, rules, procedures, and reporting requirements can be found at:

www.apex-ci.org/  
www.cepici.gouv.ci/  

Competition and Anti-Trust Laws

The Ministry of Commerce, Handicraft and Small Business Promotion, through the Commission on Anti-Competition Practices, is responsible for reviewing competition–related concerns under the 1991 competition law, which was updated in 2013.  The National Authority for the Regulation of Public Tenders is responsible for reviewing the awards of contracts.    

No significant competition cases were reported over the past year.

Expropriation and Compensation

Private expropriation to force settlement of contractual or investment disputes continues to be a problem.  Local individuals or local companies, using what appear to be spurious court decisions, have challenged the ownership of some foreign companies in recent years.  On occasion, the government has blocked the bank accounts of U.S. and other foreign companies because of ownership and tax disputes.

There is no history of public expropriations.

In cases of illegal expropriations, Ivoirian law affords claimants due process.  Even so, perceived corruption and lack of capacity in the judicial and security services have resulted in poor enforcement of private property rights, particularly when the entity in question is foreign and the plaintiff is Ivoirian or a long-established foreign resident.

Dispute Settlement

ICSID Convention and New York Convention

Cote d’Ivoire is a signatory to the International Center for Settlement of Investment Disputes (ICSID) and a signatory to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards.

In cases where the firm does not meet the nationality conditions stipulated by Article 25 of the Convention, the code stipulates that the dispute be resolved within the provisions of the supplementary mechanisms approved by the ICSID.

Investor-State Dispute Settlement

Cote d’Ivoire is a signatory to investment agreements subject to binding international arbitration of investment disputes.  Cote d’Ivoire recognizes and has been known to enforce foreign arbitral awards, but enforcement is inconsistent.

Cote d’Ivoire does not have a Bilateral Investment Treaty (BIT) or a Free Trade Agreement (FTA) with the United States.

In the past 10 years, foreign investors have had investment disputes, which are often resolved through arbitration or an amicable settlement.  One U.S. firm was involved in tax and customs disputes over its investment in the cocoa sector. As a result, the U.S. firm chose to divest its holdings.  One U.S. dispute still ongoing involves the decision of the government to nullify a memorandum of understanding with a U.S. company to fulfill sanitation work.

As a signatory to the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards, local courts are obliged to enforce foreign arbitral awards.

The U.S. government is not aware of any history of extrajudicial action against foreign investors, including U.S. firms.

International Commercial Arbitration and Foreign Courts

The Abidjan-based regional Joint Court of Justice and Arbitration (CCJA) provides a means of solving contractual disputes.  The arbitration tribunal has the ability to enforce awards more quickly, but the use of the tribunal in lieu of the court system has been limited.

Cote d’Ivoire is a member of the Organization for the Harmonization of African Business Law (OHADA), whose provisions of 1999 have replaced domestic law on arbitration.  The unified law is based on the UNICITRAL model law.

Judgments of foreign courts are recognized but difficult to enforce in local courts.  To avoid working through the Ivoirian legal system, some investors stipulate in contracts that disputes must be settled through international commercial arbitration.  Yet, even if stipulated in the contract, decisions reached through international arbitration or through OHADA are sometimes not honored by local courts.

Cote d’Ivoire’s domestic courts have no preferential treatment for state-owned enterprises involved in investment disputes.

Bankruptcy Regulations

As a member of OHADA, Cote d’Ivoire has both commercial and bankruptcy laws that address the liquidation of business liabilities.  OHADA is a regional system of uniform laws on bankruptcy, debt collection, and rules governing business transactions. OHADA permits three different types of bankruptcy liquidation:  an ordered suspension of payment to permit a negotiated settlement; an ordered suspension of payment to permit restructuring of the company, similar to Chapter 11; and the complete liquidation of assets, similar to Chapter 7.  Creditors’ rights, irrespective of nationality, are protected equally by the Act. Bankruptcy is not criminalized. Monetary judgments resulting from a bankruptcy are usually paid out in local currency. Cote d’Ivoire is ranked 77 out of 190 countries for ease of resolving insolvency, according to the World Bank’s Doing Business Report.

The joint venture Credit Info – Volo West Africa manages regional credit bureaus in the WAEMU.

Investment Incentives

The 2018 Investment Code offers mixed fiscal incentives combining tax exoneration and tax credits focusing on agriculture, agro-business, tourism, health, and education.  These include a full exoneration of customs duties or suspended VAT, and tax exemptions to business operations in some remote areas, with incentives based on the type of investment, phase of operation, local content, and participation.   There are also incentives to promote small businesses and entrepreneurship, low-cost housing construction, factories, and infrastructure development, which the government considers key to the country’s economic development. The Investment Code, the Petroleum Code, and the Mining Code delineate incentives available to new investors in Cote d’Ivoire.

The government occasionally guarantees loans or jointly finances foreign direct investment projects.  This is not a common practice.

Foreign Trade Zones/Free Ports/Trade Facilitation

Created in 2008, the free trade zone for information technology and biotechnology (VITIB) is located in the city of Grand Bassam.  In 2014, VITIB inaugurated the Mahatma Gandhi Technology Park at Grand Bassam with a loan of USD 20 million from India’s EXIM bank.  Current plans are to develop a technology corridor on VITIB land in Grand Bassam. Bonded warehouses do exist, and bonded zones within factories are allowed.  High port costs and maritime freight rates have inhibited the development of in-bond manufacturing or processing, and there are consequently no general foreign trade zones.

Performance and Data Localization Requirements

The government strongly encourages investors and firms to hire Ivoirian employees, but this is not a requirement.

The 2012 Investment Code (Article 14) guarantees the freedom to designate senior management and board members.

Citizens of Economic Community of West African States (ECOWAS) countries can legally work in Cote d’Ivoire.  For other nationalities, visa, work, and residence permits are required and the investment agency CEPICI facilitates their acquisition.  The process is not onerous and does not inhibit the mobility of foreign investors and their employees.

There are no government-imposed conditions on permission to invest, including tariff and non-tariff barriers.

The government does occasionally place conditions on location, local content, equity ownership, import substitution, export requirements, host country employment, and technology.  The Ivoirian government required that Kentucky Fried Chicken franchises, that began operating in April 2018, use locally-sourced chicken. The government also makes use of a number of tax exemptions and customs exonerations to incentivize companies to do more value-added processing in Cote d’Ivoire.

There are no performance requirements for investments.

Cellular telephone companies must meet technology and performance requirements to maintain their licenses.  Cote d’Ivoire does not have any known requirements for foreign IT firms to turn over source code or provide access to encryption.

There are no requirements that prevent or unduly impede companies from freely transmitting customer or other business related data.  Data transmission or transfer is subject to prior authorization of the telecom regulatory board Autorite de Regulation des Telecommunications (ART-CI).

Cote d’Ivoire’s law on data protection requests prior declaration or authorization by ART-CI for any data processing.  ART-CI is responsible for the oversight of local data storage.

Real Property

The Ivoirian civil code provides for the enforcement of private property rights, and the government has undertaken reform efforts to secure property rights.  Mortgages and liens exist. Secured interests in property are enforced by the Land Registry Office of the Ministry of Economy and Finance. In the World Bank’s Doing Business report, Cote d’Ivoire is ranked 112 out of 190 countries for registering property.

Foreign and/or nonresident investors who wish to lease land must obtain a permit for the development of the site, as well as a bylaw from the prefecture or sub-prefecture for the occupation of the site.

In Cote d’Ivoire, 96 percent of land does not have a clear title.  The government has committed to titling all private land within 10 years.  The government has made efforts to raise awareness on land titling throughout the country and to streamline procedures for obtaining land titles.  In 2018, the World Bank approved a program to build the capacity and institutions to support the implementation of the national rural land tenure security program, and register customary land rights in selected rural areas.  All land that is to be titled must be professionally surveyed. The surveying, which must be performed by one of the few companies allowed to execute land surveys in Cote d’Ivoire, can cost more than the value of the land. The status of the land from which thousands of refugees moved during the 2011 post-election conflict has not been resolved.  Much of that land is now occupied by squatters, many of whom are immigrants or descendants of immigrants from neighboring countries to the north of Cote d’Ivoire, particularly from Burkina Faso. A lack of titles and a conflict between modern land-tenure law and common practice hinders resolution of the land tenure issue.

If legally purchased property is unoccupied, ownership cannot be reverted to other owners (such as squatters).

Intellectual Property Rights

The Ivoirian Civil Code protects intellectual property rights (IPR).  The government’s Office of Industrial Property is charged with ensuring the protection of patents, trademarks, industrial designs, and commercial names.  Patents are valid for ten years, with the possibility of two five-year extensions. Trademarks are valid for ten years and are renewable indefinitely. Copyrights are valid for 50 years.  The Ivoirian Copyright Office has a labeling system in place to prevent counterfeiting and protect audio, video, literary, and artistic property rights in music and computer programs. In general, the protection of IPR in Cote d’Ivoire is weak and the government has limited resources for IPR protection.  While Ivoirian IPR law is in conformity with standards established by the World Trade Organization (WTO) Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), enforcement is weak due to a lack of custom checks at the country’s porous borders, limiting the law’s impact.

No IPR related laws or regulations have been enacted in the past year.

Legally the government must protect intellectual property on both exported and imported goods.  Customs has the power to seize products imported with equipment installed, detained, marketed, or illegally supplied.  Such seizures, generally of counterfeit consumer goods, are routinely publicized on government websites and media outlets, although statistics on seizures are unavailable.  The intellectual property office’s police unit has sometimes held raids against retail outlets and street vendors to confiscate pirated CDs and DVDs, and they have instituted legal proceedings against counterfeiters.  IPR violations are prosecuted and sanctions vary from three months to two years of imprisonment and fines from USD 163 to USD 8,000.

Cote d’Ivoire is not listed in USTR’s Special 301 Report.

Cote d’Ivoire is not listed in the USTR’s Notorious Markets List.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/  .

Capital Markets and Portfolio Investment

Government policies generally encourage foreign portfolio investment.

The Regional Stock Exchange (BRVM) is in Abidjan and the BRVM lists companies from the eight countries of the WAEMU.  An effective regulatory system exists to facilitate portfolio investment through the West African Central Bank (BCEAO) and the Regional Council for Savings Investments (CREPMF).  There is sufficient liquidity in the markets to enter and exit sizeable positions.

Government policies allow the free flow of financial resources into the product and factor markets.

The central bank BCEAO respects IMF Article VIII on payment and transfers for current international transactions.

Credit allocation is based on market terms and has increased to support the private sector and economic growth, specifically for large businesses.  Banks lend to the private sector, offering short-term and long-term loans and overdraft facilities. Foreign investors can acquire credit on the local market.

Money and Banking System

The banking sector is composed of 28 commercial banks and two credit institutions.  Banks are expanding their networks, especially in the secondary cities outside Abidjan, as domestic investment has increased upcountry.  The total number of bank branches has more than doubled from 324 in 2010 to 709 branches in 2018.

Cote d’Ivoire’s banking sector is improving with most banks being compliant with the BCEAO’s new minimum capital requirements.  Some public banks have had large numbers of nonperforming loans. The government is restructuring and privatizing the commercial banking sector in order to reinvigorate the banks and remove low performers from government accounts.

The estimated total assets of the five largest banks are around USD 9 billion.

The central bank of the BCEAO is common to the eight member states of the WAEMU and manages regulations.

Foreign banks are allowed to establish operations in Cote d’Ivoire.  They are subject to prudential measures and regulations of the WAEMU Banking Commission.  Cote d’Ivoire did not lose any correspondent banking relationships in the past three years.  No known correspondent banking relationships are in jeopardy.

The U.S. government is not aware of the implementation of block chain technologies in banking transactions.

Alternative financial services available include mobile money and microfinance for payments, transfers, and finances.  Mobile money has become a very popular way to make payments and many Ivoirians prefer mobile money over banking, but mobile money has yet to expand to offering full financial services.

Foreign Exchange and Remittances

Foreign Exchange

There are no restrictions on the transfer or repatriation of capital and income earned, or on investments financed with convertible foreign currency.  Once an investment is established and documented, the government regularly approves the remittances of dividends and/or repatriation of capital. The same holds true for requests for other sorts of transactions (e.g. imports, licenses, and royalty fees).

Funds associated with investments funded with convertible currency are freely convertible into any world currency.

Cote d’Ivoire is a member of the WAEMU, which uses the West African Franc (XOF), also known as the CFA.  The French Treasury holds the international reserves of WAEMU member states and supports the fixed exchange rate of 655.956 CFA to the Euro.

Remittance Policies

There are no recent changes or plans to change investment remittance policies.

There are no time limitations on remittances.  Remittances for Ivoirians were about USD 381 million in 2018 or 0.7 percent of GDP.

Sovereign Wealth Funds

Cote d’Ivoire does not have a sovereign wealth fund.

Companies owned or controlled by the state are subject to national laws and the tax code.  The Ivoirian government still holds substantial interests in many firms, including the refinery SIR (49 percent), the public transport firm (60 percent), the national television station RTI (98 percent), the national lottery (80 percent), the national airline Air Cote d’Ivoire (58 percent), and the land management agency Agence de Gestion Fonciere AGEF (35 percent).  Of the SOEs, 28 are wholly government owned, 15 are majority owned, eight are with a blocking minority, and 30 are minority owned.  Each SOE has an independent board. The government has begun the process of divestiture for some state-owned enterprises, but the program has not been completed.  The Ivoirian government is an active participant in the banking, agri-business, mining, and telecom industries.

The published list of SOEs is available at https://dgpe.gouv.ci/index.php?p=portefeuille_etat  

SOEs competing in the domestic market do not receive non-market based advantages from the government.  They are subject to the same tax burdens and policies as private companies.

The corporate governance of SOEs in Cote d’Ivoire does not meet the standards of the OECD, though the government has made some efforts to improve it.

Privatization Program

The government proposed a program to privatize a quarter of public enterprises, including approximately 15 public or semi-public enterprises, banks, the sugar company Sucrivoire (SIFCA), and USD 232 million of investments the government holds in Industrial Promotion Services (IPS)-Aga Khan Foundation projects.  The privatization process is completed for the Societe Ivoirienne de Banque (now Attijariwafa-bank), the sugar company Sucrivoire, and the cotton firm Compagnie Ivoirienne de pour le Developpement du Textile.   At the urging of the IMF, the government is continuing the privatization of banks including Versus Bank, NSIA Bank, and the housing finance bank BHCI.

Foreign investors are encouraged to compete.

These programs have a public bidding process in French.  No website on privatizations is available.

The private sector, the government, NGOs, and local communities are becoming progressively aware of the importance of Responsible Business Conduct (RBC) regarding environmental, social, and governance issues in Cote d’Ivoire.

Investment projects in energy, infrastructure, agriculture, forestry, waste management, and extractive industries are required by decree to provide an environmental impact study prior to approval.  Foreign businesses, particularly in mining, energy, and agriculture, often provide social infrastructure, including schools and health care clinics, to communities close to their sites of operation, often at the request of the government.  Some companies complain that these requests can be quite numerous. Companies are not required under Ivoirian law to disclose information relating to RBC, although many companies, especially in the cocoa sector, publicize their work. Cocoa companies publicize efforts to improve sustainability and combat the worst forms of child labor.  As a part of public procurement reform, the Ministry of Budget plans to include social needs in public procurement contracts to support job creation, fair trade, decent working conditions, social inclusion and compliance with social standards. On the environment, suggested reforms include the selection of goods and services that have a smaller impact on the environment.

There have not been high profile instances of a private sector impact on human rights or the resolution of such cases in the past year.

The government, through the Ministry of Employment and Social Protection, sets workplace health and safety standards and is responsible for enforcing labor laws.

The Act of Organization for the Harmonization of Business Law in Africa (OHADA), which is common to 17 countries including Cote d’Ivoire, outlines corporate governance standards that protect shareholders.

There are government-funded agencies in charge of monitoring business conduct.  Human rights, environmental protection, and consumer NGOs report misconduct and violations of good governance practices.

While international firms are aware of OECD guidelines and international best practices in RBC, most local firms have limited familiarity with international standards.

Cote d’Ivoire is compliant with the Extractives Industries Transparency Initiative (EITI) and discloses revenues and payments in the oil, gas, and mineral sectors.  More information can be found at: www.cnitie.ci/  

Corruption is a concern for businesses in Cote d’Ivoire.  Cote d’Ivoire endorsed ordinance number 2013-660 related to the prevention and the fight against corruption.  The High Authority for Good Governance covers corruption issues and requires that all public officials submit asset declarations at the beginning and end of their tenures in office.  The country’s financial intelligence office CENTIF has broad authority to investigate suspicious financial transactions, including those of government officials. Despite the establishment of these bodies, there have been no prominent public corruption cases despite credible allegations of widespread corruption.  These watchdog agencies are generally regarded as lacking the power and will to actively combat corruption.

The laws extend to family members of officials and to political parties.

The country’s Code of Public Procurement No. 259 and the associated WAEMU directives cover conflicts-of-interest in awarding contracts or government procurement.

Under the Ivoirian Penal Code, a bribe by a local company to a foreign official is a criminal act.

Some private companies use compliance programs or measures to prevent and detect bribery of government officials.  U.S. firms underscore to their Ivoirian counterparts that they are subject to the Foreign Corrupt Practices Act (FCPA).

Cote d’Ivoire ratified the UN Anti-Corruption Convention, but the country is not a signatory to the OECD Anti-Bribery Convention.  In 2016, Cote d’Ivoire joined the Partnership on Illicit Finance, which obliges it to develop an action plan to combat corruption.

There are no special protections to NGOs involved in investigating corruption.

Corruption in many forms is deeply engrained in public and private sector practices and remains a serious impediment to investment and economic growth in Cote d’Ivoire.  Many companies cite corruption as the major obstacle to investment in Cote d’Ivoire. It has the greatest impact on judicial proceedings, contract awards, customs, and tax issues.  Lack of transparency and failure to follow the government’s own tender procedures in the awarding of contracts lead businesses to conclude bribery was involved. Businesses have reported encountering corruption at every level of the civil service, with some judges appearing to base their decisions on bribes.  Clearance of goods at the ports often require substantial “commissions,” and the Embassy has heard anecdotal accounts of customs agents rescinding valuations that were declared by other customs colleagues in an effort to extract bribes from customers. The demand for bribes can mean that containers stay at the Port of Abidjan for months, incurring substantial demurrage charges, despite having the proper paperwork in order.

No local industry or non-profit groups offer services for vetting potential local investment partners.

Resources to Report Corruption

These contacts at agencies are responsible for combating corruption:

Inspector General of Finance
(Brigade de Lutte Contre la Corruption)
Lassina Sylla
Inspector General
TELEPHONE: +225 2252 9797
FAX: +225 2252 9798
HOTLINE: +225 8000 0380
http://www.igf.finances.gouv.ci/blc/  
info@igf.finances.gouv.ci

High Authority for Good Governance
(Haute Autorite pour la Bonne Gouvernance)
N’Golo Coulibaly
President
TELEPHONE: +225 22479 5000
FAX: +225 2247 8261

Police Anti-Racketeering Unit
(Unite de Lutte Contre le Racket –ULCR)
Alain Oura
Unit Commander
TELEPHONE: +225 2244 9256
info@ulcr.ci

President Alassane Ouattara was elected to a second term in 2015.  In 2016, a new constitution was adopted through a referendum creating the position of Vice-President, and a Senate, which convened in April 2018.  During electoral periods, demonstrations and protests by political parties occur often and occasionally lead to vandalism and clashes with security forces.  During the October 2018 municipal and regional elections, there were reports of violence in Abidjan and in areas throughout the country, raising concerns for the 2020 presidential election.  Unions also engage in protests that sometimes become violent. Still, social unrest has not had a serious economic impact.

Cote d’Ivoire‘s security situation has significantly improved since the 2010-2011 post electoral dispute that led to civil conflict.  The government lacks proper command and control over much of the armed forces. In January, February, and May 2017, soldiers mutinied, demanding payment of bonuses.  The government responded by largely acceding to their demands and pledging to improve living and working conditions for armed and security forces. Cote d’Ivoire suffered its first terrorist attack in March 2016 on the beaches of Grand Bassam, for which Al Qaeda in the Islamic Maghreb claimed responsibility.  Ivoirian security forces responded very quickly, demonstrating that the capacity of the country’s special operations units has improved over the past few years.

Political tension in Cote d’Ivoire is increasing as the next presidential election in 2020 approaches, leading some observers to express concern about the possibility of increasing social unrest or potential electoral violence.

The official unemployment rate is 11 percent with higher unemployment in urban areas.  The unemployment rate among those aged 14-35 is 8.6 percent. The percentage of the non-agricultural workforce in the informal economy is 47 percent.  Foreign workers from neighboring countries make a significant part of the work force, especially in agriculture. The numbers fail to fully account for the large informal economy throughout the country, and do not accurately portray the general lack of well-paying employment opportunities.  Despite the government’s efforts, child labor remained a widespread problem in rural and urban areas, particularly on cocoa and coffee plantations, artisanal gold mining areas, and urbanized regions.

There are significant shortages of skilled labor in higher education fields including information technology, engineering, finance, management, health, and science.  The Ivoirian government is working with the Millennium Challenge Corporation (MCC) to build and develop four technical and vocational training centers.

Labor laws favor the employment of Ivoirians in private enterprises, and state that any vacant position must be advertised for two months.  If after two months no qualified Ivoirian is found, the employer is allowed to recruit a foreigner provided that s/he plans to recruit an Ivoirian to fill the position in the next two years.  The foreign employee must be given a labor contract.

There are no restrictions on employers adjusting employment to fluctuating market conditions.  Employees terminated for reasons other than theft or flagrant neglect of duty have the right to termination benefits.  Unemployment insurance and other social safety programs exist for employees laid off for economic reasons, but for the 85 percent of workers employed in the informal sector, this is not an option.

Labor laws are not waived to attract or retain investment.

Collective bargaining agreements are in effect in many major business enterprises and sectors of the civil service.  A prolonged teachers’ strike was submitted for settlement but due to the fractured nature of the teacher’s union not all parties agreed to the decision.

Labor disputes are submitted to the labor inspector for amicable settlement before engaging in any legal proceedings.  If this attempt to settle the dispute fails, then the labor court can be engaged to resolve the dispute.

No strike has posed an investment risk during the last year.

There are no gaps in law or practice with international labor standards that pose a reputational risk to investors.

In 2017, the government passed a law forbidding most forms of child labor for children 12 and under while restricting it for children aged 13 to 17.  The law’s passage put Ivoirian law on par with ILO standards for child labor.

There are currently no OPIC projects in Cote d’Ivoire, but OPIC continues to look for opportunities, particularly in energy and infrastructure.  In 2017, the Ivoirian government ratified its investment incentive agreement with OPIC.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Table 3: Sources and Destination of FDI

Table 4: Sources of Portfolio Investment

Data not available.

Jeremy Chen (until June 2019)
Email: chenjh2@state.gov

Davinia Seay (after June 2019)
Email: seaydm@state.gov

Economic and Commercial Officer
B.P. 730 Abidjan Cidex 03, Cote d’Ivoire
Tel: +225 2249 4416

Policies Towards Foreign Direct Investment

Sao Tome and Principe is taking steps toward sustainable economic growth.  Its economic prospects likely depend on the government’s ability to attract sustained FDI.  Therefore, the government is anxious to improve the country’s investment climate to make it a more attractive destination for foreign investors.  Under Article 14 of the Investment Code, the State guarantees equal and non-discriminatory treatment to both foreign and domestic investors operating in the country.  The Trade and Investment Promotion Agency (APCI), housed under the Ministry of Planning, Finance and Blue Economy, promotes and facilitates investment through single-window service and multi-sectoral coordination.

Limits on Foreign Control and Right to Private Ownership and Establishment

According to Article 4 of the Investment Code, both domestic and foreign investors are free to establish and own business enterprises, as well as engage in all forms of business activity in STP, except in the sectors defined by law as reserved for the state, specifically military and paramilitary activities and as well as the Central Bank operations.  STP is gradually moving toward open competition in all sectors of the economy, and competitive equality is the official standard applied to private enterprises in competition with public enterprises with respect to access to markets, credit, and other business operations. The government has eliminated former public monopolies in farming, banking, insurance, airline services, telecommunications, and trade (export and import).

There are no limits on foreign ownership or control except for activities customarily reserved for the state, including military, paramilitary, and central bank activities. The form of public participation, namely the percentage of government ownership in joint ventures, varies with each agreement.  Based on Article 8 of the Regulation of the Investment Code, all inbound investment proposals must be screened and approved by the applicable ministry for the economic sector in coordination with APCI. According to Article 14, an investment proposal can be rejected if it threatens national security, public health, or ecological equilibrium and if the proposal has a negative effect or insufficient contribution to country’s economy.  However, these mechanisms do not go beyond the law’s mandate and are not considered barriers to investment.

Other Investment Policy Reviews

The government has not conducted any investment policy reviews through the Organization for Economic Cooperation and Development (OECD).  Neither the World Trade Organization (WTO) nor United National Conference on Trade and Development (UNCTAD) has conducted a review. STP has observer status with WTO and is a member of UNCTAD.

Business Facilitation

STP has taken steps to facilitate investment and improve the business environment in recent years.  The Millennium Challenge Corporation (MCC) worked with STP from 2007 to 2011 on a Threshold Country Program to improve investment opportunities, including creating a “one-stop shop” to help encourage new investments by making it easier and cheaper to import and export goods, reducing the time required to start a new business and improving STP’s tax and customs clearance administration.  Currently a business can be registered within one to five days. These business facilitation services, including the “one-stop-shop” for business registration, offer equal treatment for women and underrepresented minorities in the economy; however, there is no special assistance provided to these groups. The Single Window website   (http://gue-stp.net/spip.php?article24  ; Portuguese language only) provides information and application form on creating and registering companies in STP.

Outward Investment

While STP’s government does not actively promote outward investment, it does not restrict domestic investors from investing abroad.

STP and Portugal signed a bilateral investment treaty (BIT) and a Double Tax Agreement in 1995 and 2015 respectively.  Both documents are still pending ratification. STP has not signed either a BIT or bilateral taxation treaty with the United States. There were no ongoing systemic tax disputes between the government and foreign investors or any taxation issues concerning U.S. investors.

Transparency of the Regulatory System

The laws and regulations that affect direct investment, including environmental, health, and safety rules and regulations, apply equally to foreign and domestic firms.  STP tax laws reward citizens who return to the home country to invest, while also containing provisions for attracting foreigners to invest in STP. The STP legal code is based on Portuguese law, and laws and regulations are applied at the national level.  Rule-making and regulatory authority exists at the national level and regulations are developed at the ministerial level, approved by the National Assembly and promulgated by the president. The ministry concerned is responsible for any regulatory enforcement mechanisms.  Drafted bills or regulations are rarely made available for public comment. Copies of most regulations can be purchased online at https://www.legis-palop.org/   or directly at the Ministry of Justice, Public Administration and Human Rights in the format of the Official Gazette.

International Regulatory Considerations

STP is a member of the Economic Community of Central African States (ECCAS).  ECCAS’s fundamental goal is to promote exchange and collaboration among the member countries and give an institutional and legal framework to their cooperation.  ECCAS is the largest economic community in Central Africa, including Central African Economic and Monetary Community (CEMAC) member states (Gabon, Cameroon, the Central African Republic, Chad, Republic of Congo, and Equatorial Guinea), as well as Burundi, the Democratic Republic of Congo, Angola, Rwanda, and Sao Tome and Principe.  Covering an area of 6,640,600 square kilometers, ECCAS has a total population of approximately 130 million. STP is not a member of the WTO, but has observer status. STP is among the forty-four African Nations that signed the agreement of the African Continental Free Trade Area (AfCFTA) in March 2018 in Kigali, Rwanda.

Legal System and Judicial Independence

Disputes are generally resolved through negotiations between parties without litigation, and there are few known instances of disagreements involving foreign investors reaching international courts.  One notable exception is a 10-year dispute between a local businessman and Angolan investors over a brewery, which led to the Parliament’s dismissal of Supreme Court justices in 2018. The country has a written commercial law but does not have specialized courts.  Overall, the legal system is perceived to act independently. The judicial process is procedurally fair but is subject to manipulation on occasion. All regulations or enforcement actions are appealable to the Supreme Court.

Laws and Regulations on Foreign Direct Investment

In April 2018, the country’s first Public Private Partnership (PPP) Law (Law 06/2018) entered into force.  In addition, both the new Commercial Registry Code (Law no. 13/2018 of July 3) and the Code of Notaries (Law 14/2018 of July 4) were approved in 2018, entering into force on January 4, 2019, revoking the old codes (Law no. 47619, March 31, 1967), and the Decrees 42644 and 42645, both of November 14, 1959.

Now, a new business can obtain expedited registration within 24 hours for approximately USD 470 or between three to five days for around USD 240.  STP ranks 148 out of 190 in terms of starting a new business according to the 2019 Doing Business Report, the same rank as in 2018.

Although no online business registration process exists, companies can easily register their businesses at the counter.  The following is a general description of how a foreign company can establish a local office:

1. Provide full company documentation, translated into Portuguese.
2. Check the uniqueness of the proposed company name and reserve a name.
3. Notarize the company statutes with the registration office at the Ministry of Justice.
4. File a company declaration with the Tax Administration Office at the Ministry of Finance, Commerce, and Blue Economy.
5. Register with the Social Security Office at the Ministry of Labor and Social Affairs.
6. Publish an incorporation notice in the official government gazette (Diario da Republica).
7. Publish the incorporation notice in a national newspaper.
8. Register the company with the Commercial Registry Office at the Ministry of Finance, Commerce, and Blue Economy.
9. Apply for a commercial operations permit (also known as an “alvara”).
10. Apply for a taxpayer identification number with the Office of Tax Administration at the Ministry of Finance, Commerce, and Blue Economy.
11. Register employees with the Social Security Office.

Other required documents include: 1) copies of the by-laws of the parent company and of the minutes of the meeting of the board of directors in which the opening of the STP branch is approved; 2) a certificate of appointment of the general manager for the STP office; 3) a copy of any agreement signed with a Sao Tomean company or with the STP government; 4) two copies of permits from the Court authorization to operate; and 5) two photographs and a copy of the passport of the General Manager.

In addition, the Single Window website (http://www.gue-stp.net/spip.php?article24  ; Portuguese language only) provides information on creating and registering companies in STP.

There are no agencies or brokers that provide services to simplify the procedures for establishing an office in STP.  Some companies hire a legal office for assistance.

Competition and Anti-Trust Laws

AGER (General Regulation Authority of the Democratic Republic of Sao Tome and Principe) was created to promote competition, as well as to prevent operator abuses in the water, electricity, telecommunications sectors as well as in the postal service.  AGER was established in 2005 and is housed under the Ministry of Public Works, Infrastructures, Natural Resources, and Environment. AGER supervision does not go beyond its mandate. For other economic sectors, STP does not have specific agencies that review transactions for competition-related concerns.

Expropriation and Compensation

The law permits the government to expropriate private property only if it is deemed to be in the national public interest and only with adequate compensation.  There is no evidence to suggest that the government would undertake expropriation in a discriminatory manner or in violation of established principles of international law and standards.

Aside from a massive land expropriation from colonial farmers in 1976 – later recognized by the government as detrimental to STP’s economy – there have not been any documented cases of expropriation of foreign-owned properties.  The government has reportedly considered expropriating land to expand the runway at the international airport, but thus far has been reluctant to do so out of concern that any expropriation could be a deterrent to new investment.

Dispute Settlement

ICSID Convention and New York Convention

STP is a member of the International Centre for the Settlement of Investment Disputes (ICSID Convention) and the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Investor-State Dispute Settlement

STP does not have a Bilateral Investment Treaty with the United States.  In May 2018, a dispute between a local businessman and Angolan investor over a brewery, led to government intervention. There are no reports of investor-state disputes that have involved a U.S. person in the past 10 years.  The STP courts recognize and enforce foreign arbitral awards issued against the government.

International Commercial Arbitration and Foreign Courts

STP does not have any conflict mediation system but the country has a Voluntary Arbitration Law (LAV).  The LAV is largely based on the Portuguese Arbitration Act of 1986. Many of the principles of the UNCITRAL Model Law are incorporated into the LAV.  The Arbitration Center, which was housed under the Chamber of Commerce, has ceased activities. STP’s legal system recognizes international arbitration, and local courts recognize foreign arbitral awards, though enforcement may be difficult.  No state-owned enterprise (SOE) is currently involved in an investment dispute.

Bankruptcy Regulations

STP has a bankruptcy law, but it is not well developed.  In the World Bank’s 2019 Doing Business Report, STP ranks 168 out of 190 economies on the ease of resolving insolvency.

Investment Incentives

According to the 2016 Investment Code, all investments above 50,000 Euros are eligible for guarantees and benefits, including fiscal incentives stated in the Fiscal Benefits and Incentives Code of November 2016.  Examples of such incentives include tax deductions for corporate tax, stamp tax, taxes on banking operations, and withholding tax. Other incentives include the reduction or exemption of import and re-export tariffs.  The government also provides incentives for human resources training, as well as other benefits. Based on Article 31 of the Fiscal Benefits and Incentives Code, the incentives are granted through the Private Investment Registration Certificate (CRIP) issued by the Trade and Investment Promotion Agency on approval of the investment project.  However, unlike in the 2008 Investment Code, the 2016 Code does not provide access to State-owned land and facilities as incentives to invest. The government did not adopt any significant measures in 2018 to incentivize investments.

Foreign Trade Zones/Free Ports/Trade Facilitation

STP currently has no free trade zones or free ports.

Under Article 33 of the Fiscal Benefits and Incentives Code, the government defines the districts of Cantagalo, Lemba, Lobata and Caue, as well as Principe, as Special Development Zones.  Therefore, any new investment established in these areas under the Investment Code can qualify for special incentives. According to Article 14 of the Investment Code, the state assures fair, non-discriminatory, and equal treatment of all investment in the national territory.  Companies that qualify may benefit from reductions or exemptions of taxes under the conditions set forth in the Code of Free and Offshore Activities.

Performance and Data Localization Requirements

The government encourages but does not mandate local employment.  STP has no specific performance requirements as a condition for establishing, maintaining, or expanding investment.  However, the government offers better incentives for those companies that choose to reinvest or expand their investment.  There are no requirements for investors to buy local products, to export a certain percentage of output, or to invest in a specific geographical area.  There is no blanket requirement that nationals own shares in foreign investments in STP. The visa application process is straightforward and transparent and visas or work permits are usually easy to obtain if companies meet all the requirements.   Nevertheless, there are few Sao Tomean embassies worldwide to process visa applications. Under the Legal Regime of Foreign Citizens in STP, STP lifted visa requirements for citizens of the United States, EU, Canada, and the Community of Portuguese Language Countries.  Also, any foreign citizen holding a valid passport with a valid Schengen or U.S. visa can enter and stay in the country up to 15 days. STP recently began accepting online visa applications. Information regarding procedures to submit an online visa application is available (Portuguese and English) at http://www.smf.st/evisa/index.php  .

Real Property

Based on Article 46 of the Constitution, the state guarantees private property rights.  According to Article 13 of the Expropriation Code, authorities must provide fair, adequate, and effective payment at market value in advance before expropriating any private property.  The government owns the vast majority of land in the country, most of which is agricultural land granted by the Ministry of Agriculture, Fishing and Rural Development through concession of land titles under the Land Reform Law.  Less than 10 percent of land is held by private owners. Foreigners cannot purchase land, although they can purchase structures. The 2019 World Bank’s Doing Business Report ranks STP 173 out 190 economies in terms of registering properties.  The new Notary Law approved in 2018 ensures judicial security and is intended to improve the speed and accuracy of notarial acts. U.S. companies have not raised property rights concerns with the Embassy.

Intellectual Property Rights

U.S. companies have not raised intellectual property rights (IPR) concerns with the Embassy.  During the past year, STP did not enact any new IPR related laws or regulations. All copyright and industrial property rights proceedings are covered by the Directorate of Industry in collaboration with National Directorate of Culture, both under the Ministry Tourism, Culture, Commerce and Industry.

STP is not listed in USTR’s Special 301 Report or Notorious Markets List.  STP is a member of the World Intellectual Property Organization (WIPO). The Regulation on Industrial Property regulates the enforcement of IP, including geographical indications, patents, and trademarks.  STP does not report on seizures of counterfeit goods. For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/  .

Capital Markets and Portfolio Investment

Portfolio investment is undeveloped.  The Central Bank of STP (BCSTP) issued Treasury bills (T-bills) for the first time on June 29, 2015 for 75 million Dobras (around USD 3.7 million) at the fixed interest rate of 6.2 percent, with a maturity of six months.  The demand was 20 percent higher than the offer, resulting from the participation of three domestic banks. The most recent issuance occurred on March 15, 2018. STP does not have a stock market. Articles 13 and 14 of the Foreign Exchange Regulations facilitate the free flow of financial resources under the supervision of the Central Bank.

Foreign investors are able to get credit on the local market; however, access to credit is difficult due to the limited variety of credit instruments, high interest rates, and the number of guarantees requested by the commercial banks.  The World Bank Doing Business Report 2019 ranks STP 161 out 190 economies regarding access to credit, a two point drop from 2018. There are currently few significant U.S. investors active in STP.

Money and Banking System

STP has four private commercial banks.  Portuguese, Nigerian, Angolan, Cameroonian, Gabonese and Togolese interests (as well as those of STP) are represented in the ownership and management of the commercial banks.  In early 2018, the Central Bank (BCSTP) declared commercial bank “Private Bank” insolvent and opened a public tender to liquidate its assets and liabilities. The Gabonese investment bank BGFI opened its Sao Tomean operation in March 2012.  Banking services are available in the capital with a few smaller branches in cities in the north, south, and center of the country, as well as in Principe.

In addition to retail banking, commercial banks offer most corporate banking services, or can procure them from overseas.  Local credit to the private sector is limited and expensive, but available to both foreign and local investors on equal terms.  The country’s main economic actors finance themselves outside STP. Foreigners must establish residency to open a bank account.

Foreign Exchange and Remittances

Foreign Exchange

The Central Bank supervises the national financial system and defines monetary and exchange rate policies in the country.  Among other responsibilities, the Central Bank sells hard currency and establishes the reference rate. Access to foreign currency is limited; however, there is no official norm restricting access.  The Article 18 of the Investment Code, foreign investors are allowed to transfer or repatriate funds associated with an investment.

The Dobra, denoted by DB is the country’s national currency.  In July 2009, STP and Portugal signed an economic cooperation agreement to peg the Dobra to the Euro rather than a weighted basket of currencies.  As a result, since 2010, the Dobra has been pegged to the Euro. The Central Bank introduced the new currency in January 2018 to modernize and strengthen the country’s financial system.  The exchange rate is currently 1 euro to 24.5 DB. This peg offers credible parity, minimizes monetary instability costs, and provides better credibility for the exchange rate and monetary policy.  As of April 2019, USD 1 was equivalent to about DB 21.7.

Remittance Policies

Repatriation of capital is possible with prior authorization.  According to both the Foreign Exchange Law and the Investment Code, transfer of profits outside the country is also allowed after the deductions for legal and statutory reserves and the payment of existing taxes owed.  The government encourages reinvestments with associated reductions in income taxes.

Sovereign Wealth Funds

STP has a National Oil Account (NOA).  The NOA was previously funded by signing bonuses paid by energy and oil companies to gain rights to conduct exploration and production activities.  The Petroleum Law allows the government to withdraw up to 20 percent of the balance of the NOA every year as calculated on June 30 of the previous year.  Details are available on the state budget and under NOA online.

When STP’s cocoa plantations were shut down in the late 1980s, most SOEs also closed.  EMAE (Water and Power Supply Company), ENAPORT (Port Authority Company), ENASA (National Company for Airports and Air Safety), and Empresa dos Correios (Post Office) are 100 percent state-owned enterprises with some financial autonomy.  Through a joint venture, the government holds 49 percent of CST (Santomean Telecommunication Company) while the largest Brazilian telecommunication company, OI, owns 51 percent. All four fully-owned state enterprises are subject to audits by the Ministry of Planning, Finance and Blue Economy and the Audit Court.  They have financial autonomy, but largely depend on funds from the state budget.

Privatization Program

STP does not have an active privatization program.  The IMF has recommended privatization through periodic reports.

There are no rules or legislation pertaining to responsible business conduct (RBC) in STP.  Companies generally act in accordance with labor, environment, flora and fauna protection, consumer protection, taxation, and other related laws.  There is limited awareness of expectations of or standards for responsible business conduct. STP participates in the Extractive Industries Transparency Initiative (EITI).

STP has an overall positive trajectory in combating corruption due to reforms the government has undertaken in recent years; ranking 64 out of 180 countries and territories on Transparency International’s 2018 Corruption Perception Index.  The government adopted an anti-corruption law in 2012. To reduce corruption by civil servants and to track the flow of money, authorities put in place a new requirement that all payments to government entities over USDUSD 5 be made directly at the Central Bank and all salary payments to civil servants be paid directly to the employees’ accounts at commercial banks.  The government has denounced corruption and pledged to take necessary steps to prevent and combat it.

In 2013, the parliament adopted an anti-money laundering/counter-terrorist financing (AML/CFT) law in compliance with international standards.  The law includes a clear description of the crimes involving money laundering and terrorism financing activities, specifies the persons and entities that authorities can hold criminally responsible, describes the sanctions that authorities can impose and the assets they can confiscate in connection with the criminal activities, and establishes STP’s regulatory structure.  The law designates the Financial Information Unit (Unidade de Informaçao Financeira) as the central agency in STP with responsibility for investigating suspect transactions.  STP was removed from the Financial Action Task Force’s (FATF) 2013 list of countries that have strategic deficiencies in their AML/CFT standards.  STP is a member of the Inter-Governmental Action Group against Money Laundering in West Africa, a FATF-style regional body.

According to the 2016 Investment Code, all investment proposals must be submitted to the APCI, which coordinates the analysis and approval of investment projects.  The law limits contacts between investors and officials involved in the approval process. The law allots time for each investment approval procedure to limit the potential opportunities for corruption and bribery.

STP signed and ratified the UN Anticorruption Convention.  STP is not party to the Economic Co-operation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

STP does not have a designated agency responsible for combatting corruption.

Resources to Report Corruption

Deodato Capela, President
Centro de Integridade Pública de Sao Tome e Principe (STP Public Integrity Center) – Anticorruption, Transparency and Integrity -NGO
P.C: 330, Almeirim-Sao Tome; Sao Tome e Principe
Telephone: + 239 991 1116
Email: cipstp.org@gmail.com
http://cipstp.st/  

STP is relatively stable, has no ethnic tensions, and has a relaxed lifestyle which locals refer to in local dialect as leve-leve (“take it easy”).  Since democratic reforms in 1990, the archipelago has been a good example of democracy in the sub-region with a history of the peaceful transfer of power and consensus in decision making.  Protests in early 2018 over the creation of the Constitutional Court highlighted the lack of consensus in that decision. Close legislative elections in October 2018 raised tensions; however, the courts certified the original vote counts and in December opposition parties formed a new coalition government in a peaceful transfer of power.

The National Assembly is made up of 55 seats. Currently, Independent Democratic Action holds 25 seats, the MLSTP/PSD, 23 seats, the coalition PCD-MDFM-UDD, 5 seats, and the Sao Tome and Principe Independent Citizen Movement (MCISTP), 2 seats.

STP has a generally good human rights record and demonstrates a respect for citizens’ and workers’ rights.  Strikes are not the primary means to settle labor disputes and labor strikes have been sporadic in recent times.

Since independence in 1975, there have been no incidents of politically motivated attacks on projects or installations.  There is no anti-American sentiment and instances of civil disorder are rare. Piracy and potential for terrorist acts exist in the Gulf of Guinea, but the impact on STP and its territorial waters has been limited.  STP has sought to be an active partner in regional maritime security efforts, although its capacity and resources are minimal due to budget constraints. Violent crime is low.

A significant portion of STP’s workforce is young, relatively well-educated, and multilingual (Portuguese and French).  Further training of the workforce is needed, however, for the economy to continue development. The percentage of foreign/migrant workers is low.  The government encourages companies to hire nationals, but does not require it. The government set the national minimum wage for private and public sectors in 2016.  The basic salary varies by the size of the enterprise and will increase over time. For micro enterprises or family businesses, the minimum wage is around USD 37 per month, small business USD 47, medium enterprise USD 60 and large enterprise USD 74.  The basic salary for the public sector is approximately USD 50. Minimum wage, workday, overtime, paid annual vacations, and holidays are established in labor laws. Women are entitled to state-funded maternity leave for a period of 30 days before and 30 days after childbirth.  The law recognizes the right of workers to form and join independent unions, conduct legal strikes, and bargain collectively. While the law provides for the right to strike, including by government employees and other essential workers, the law strictly regulates this right. The law does not prohibit anti-union discrimination or retaliation against strikers.  Labor laws, including occupational health and safety standards, are poorly enforced due to a lack of resources. Workers’ collective bargaining agreements remain relatively weak due to the government’s role as the principal employer and key interlocutor in labor matters, including wages.

The Overseas Private Investment Corporation (OPIC) is authorized to do business in STP, but it has not been active in the country.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

* Source for Host Country Data: Ministry of Planning, Finance and Blue Economy, 2019

Table 3: Sources and Destination of FDI

Data not available.

Table 4: Sources of Portfolio Investment

Data not available.

Diana Costa
Political/Economic Officer
U.S. Embassy Libreville
Telephone: +241 0145 7000
Email: LibrevilleEconomic@state.gov