Thirty days have passed since the presentation by the Ivorian government of bold measures to support economic actors to mitigate the impact of the Covid-19 pandemic. Financial Afrik takes stock of the implementation with Louis S. Amédé, Managing Director of the National Federation of Industries and Services of Côte d'Ivoire (FNISCI). The least that can be said is that the enthusiasm aroused among manufacturers by the announcement of these measures seems to have faded as soon as the first implementation measures were taken. Interview.
To what extent does the Coronavirus health crisis affect industrial activity in Côte d'Ivoire?

One of the very first economic impacts of the Coronavirus health crisis was the extreme disruption of global supply chains from the last weeks of January 2020, particularly in Asia and then in Europe. These chains generally act as a transmission belt for the current global economic dynamics, so their disruption has logically affected industrial activity in Côte d'Ivoire.

At the end of March, tensions were already felt on the stocks of raw and/or intermediate inputs generally imported from China, production recorded a drop under the combined effects of supply difficulties and the contraction in demand -compared to at the same period the previous year-, deliveries were constrained with the implementation of the first measures restricting mobility and social interactions. The magnitude of the decline in activity of the manufacturing industries, energy production - which constitute the bulk of the members of the FNISCI - fluctuated between 15% and 18% or in values between 30 and 120 billion FCFA. Anything that augurs damage that could cause on the Ivorian economy, the situation if it were to last. A stochastic simulation of the Ivorian economy in the context of the Covid-19 pandemic commissioned by the FNISCI in order to assess the impact of the loss of working time on the creation of wealth at the national level indicates that the loss of he equivalent of 08 weeks of working time - out of the 52 that make up the year - could cost the country about 5 points of GDP, or in value about 1,500 billion FCFA.

What are the issues arising from this situation of general decline in activities?

The main challenge for all the countries of the planet, including Côte d'Ivoire, is the preservation of the economy from collapse. Because disruptions in supply, reductions and losses in production resulting from cancellations of orders, the imbalance of cash flows, delivery and export difficulties, the increase in exceptional expenses linked to the protection of personnel and the restructuring of the workforce, which generally characterizes the situation, exposes industrial companies to a risk of cessation of activity. This risk is unfortunately growing with the unpredictable persistence of this crisis. At the end of April, the drop in activity, at the level of the Ivorian industrial sector, will oscillate around an average of 35% to 50% with more than 18,000 employees placed on technical unemployment. It follows from this situation that stabilizing the productive apparatus is the major immediate objective to be achieved if we do not want to permanently compromise the prospects for economic recovery, once the health crisis has passed. Because, she will end up getting through this crisis, although the end of the tunnel is difficult to see at the moment!

This irrefutable perspective raises an essential question: how long will it take for the national economy to recover from the crisis? And the question applies to all countries. Because this decisive deadline will be all the closer - which is desired - as the economic and social response plan adopted by the State - in constructive consultation with the economic actors - will have effectively contributed to forging the operational resilience of the system. national productive. That is to say how crucial it is that the measures of this plan be well calibrated from the point of view of priorities and targets to be achieved and perfectly executed.

The package of measures announced by the Ivorian government to respond to the crisis is ambitious!

Indeed ! This had even fed a certain enthusiasm in the economic landerneau. But this feeling was quickly dampened by the first measures adopted by the government to operationalize the measures of the plan. Unfortunately ! Indeed, on March 31, 2020, as you noted, the Prime Minister, Head of Government declined an Economic, Social and Humanitarian Support Plan (PSESH) which he evaluated at 1,700 billion FCFA (approximately 2.6 billion euros), the equivalent of 5% of GDP, specifying that this plan had a dual objective: to mitigate the impact of the pandemic on economic actors in the formal and informal sectors and the populations and to prepare for a resumption of activities. at the end of the pandemic. So clearly defined priorities!

This plan, I reaffirm it, was welcomed, in these general aspects, by all the organizations of the Ivorian private sector, including the FNISCI - although we did not fail to draw the attention of the authorities to the poverty of the package of measures into concrete and clear provisions for the preservation of employment. After almost a month, to the day, of the announcement of the Plan, the device for its implementation, which is being deployed, force questioning. In particular, on its objective capacity to fully produce the expected effects. This circumspection proceeds quite simply from the fact that the ways of confining the field and the scope of the measures which are taken in this context, in the name of containing the budgetary impact of the plan, tend to empty the latter of their substance with the risks severely limiting the positive impacts on the economy. So questionable targets! Just that! And the concern of the industrial sector, on this subject, the FNISCI did not fail to translate it to the authorities through various channels.

Does this mean that industry and government are on different wavelengths?

Not really! There is no sharp divergence. But rather, I would say, a parallel convergence. Because, the objective of avoiding a sharp deterioration in the national economy is shared by the Administration and the entire private sector. How to achieve this, in the current context of an unexpected health crisis with a destabilizing impact on economic activity, it is at this level that we make ourselves very poorly understood by the public authorities. The business support measures of the PSESH consist mainly of deferred payment, for a period of three months, of taxes and duties as well as certain social charges. The ex-abrupto slowdown in economic activity - which characterizes the situation - having as its corollary a cash flow shock, liquidities are becoming of decisive importance for companies. And the deferral of payment of tax charges has the value of support – albeit indirect but precious – for companies, in terms of cash flow or liquidity.

Therefore, it seems important to us that it benefits the greatest number of companies. The sudden drop in activity being general. The Administration preferred to restrict the benefit of the measure only to "companies experiencing cash flow difficulties" and limit the scope to a basket of taxes and duties so well targeted that in the end, quite naturally, it is of no interest to certain categories of businesses. The manoeuvre, skilfully carried out by the Administration, has the advantage, in the very short term, of minimizing the impact of the measure on public finances. However, we cannot hide the fact that the durability of the impact of this crisis on economies depends on the effectiveness of the measures adopted to respond to the immediate challenge of stabilizing the productive system. We can therefore only be realistic! And even somewhat dismayed because, this crisis has the particularity of also carrying, all the same, some industrial opportunities. But forced to deal with framework conditions for the management of immediate contingencies induced by the health crisis, which are still too diffuse, Ivorian industrial companies are somewhat forced to wait where some could have been on the offensive!

Speaking of being offensive, what is stopping industrial companies from attacking as their counterparts in Morocco are currently doing?

This is so simply because public or official speech struggles to convey sufficiently clear perspectives for them. While essential predictability for businesses in normal times, is cardinal in crisis circumstances. You have the advantage of knowing Morocco well. And you know that the very first things that the Sherifian authorities did, in the economic management of the crisis, were, schematically, to define clear political and economic priorities, to identify the options for supporting the economy that they carry and decline in a manner just as clear as precise for all, the operational measures. Endowed with a clear legibility of the actions of economic response and a clear visibility as for the evolution of the public policy of their country, the Moroccan industries, can only be with the offensive.

This does not come to mind immediately, but the cash and guarantee measures which, in our countries, generally form the basis of the economic response plans to the pandemic presuppose that companies are strong enough to overcome the crisis in financing the costs through self-financing and/or borrowing. And this state of affairs means that the economic response measures contribute, in the current phase of the crisis, to strengthening the operational resilience of economic actors. If this is not the case, we are exposed to damage which will require a much larger, and therefore more expensive, response, later warns the World Bank for a few days. Morocco in Africa, but also South Korea in Asia and Germany in Europe all have in common to have been able to take full measure of the situation and act accordingly. It cannot be otherwise for Côte d'Ivoire in view of its ability to influence the economy of UEMOA.

If therefore, as you imply, Côte d'Ivoire cannot sustainably avoid adopting an exhaustive and very specific plan to support its productive sector, what are the objective prospects for the Ivorian industrial sector? ?

In terms of actions, currently, the energies are all directed, for lack of clear legibility of public action, towards the management of the immediate contingencies of the crisis. On the thinking front, the first ideas for post-pandemic recovery and then economic recovery are beginning to come to us from some of our member companies. The crisis will eventually pass. But one thing is that the country is doing well. Which is beyond the shadow of a doubt. Quite another is to recover from this crisis… and quickly! And there, the quality of the economic recovery program that will be implemented by the public authorities, over the period 2021-2022, will depend on the dynamism of the recovery...and by extension the time that the Ivorian economy will take to recover its beautiful dynamics before the crisis! The industrial sector, in its various components, is working on proposals to stimulate the government. In particular for the preparation of the 2021 finance law and the structuring of national development guidelines for the period 2021-2025.

Very primary analyses, already emerge some structuring certainties of the main axes which could be those of a promising economic recovery program, in the sense of our member companies: firstly, the post-pandemic world will have a strong sensitivity to questions of health and hygiene with strong demand for personal protection products (hydro-alcoholic gel, masks, disinfectant, etc.) and health products; secondly, strong responses will have to be provided by the State, through various mechanisms to encourage companies to maintain their efforts and stimulate consumption/demand; thirdly, strengthening the competitiveness and profitability of businesses will be the cornerstone of economic and financial policy and fourthly, savings could not be made from an exhaustive public investment policy. This crisis has revealed how often it is important that certain goods and services are produced locally. The conviction of Ivorian industrial companies is that this new religion of industrial relocation born of this state of affairs, there is a way to capitalize on it. Of course, provided there is better consistency between the strategic options officially announced and the operational arrangements made for this purpose. The quality of post-pandemic reconstruction of Covid-19 is also at this price!