Cote d’Ivoire gained its independence in 1960 and thereafter enjoyed
three decades of stability under President Felix Houphouët-Boigny.(2)
The country’s relative political success was linked to its position as
a leading cocoa exporter, which offered the country reasonable economic
stability in West Africa.(3) When President Houphouët-Boigny died in
1993, it became clear that he had constructed a political system in
which he was indispensable and the procedure for selecting his
successor had intentionally been rendered confusing.(4) What followed
was a chaotic succession battle, a series of coup attempts, a civil war
(2002- 2003) and the division of Cote d’Ivoire into the
Government-controlled South and rebel-controlled North.(5) Human rights
abuses by both the Government and the rebel forces have been
substantial, including incidents of torture, rape,(6) extrajudicial
killing and politically motivated disappearances.(7) Elections have
been set to take place in 2010, but it remains unclear whether these
will actually occur: the country has a history of postponing elections
and Cote d’Ivoire’s leadership have indicated unwillingness to
participate in democratic processes.(8)
The continued political instability and associated human rights
abuses in Cote d’Ivoire are directly funded by the cocoa industry.(9)
This brief explores the cocoa trade’s connection to the conflict and
argues that consumers should pressure chocolate producers to reveal
their cocoa sources...[More]
Summary
Côte d'Ivoire is the world's biggest producer of cocoa, the main
ingredient for chocolate. Yet few of the billions of consumers of
chocolate around the world are aware of the role that the cocoa trade
has played in the armed conflict and political crisis in Côte d'Ivoire
in recent years.
"Cocoa in Côte d'Ivoire is the same as timber or diamonds were in Liberia".(i)
Diplomatic source in Abidjan, June 2006.
Côte d'Ivoire accounted for around 40% of world cocoa production
in 2006. Cocoa is the main economic resource of the country,
representing on average 35% of the total value of Ivorian exports,
worth around 750 bn CFA(ii) per year($1.4bn)(1). Out of a total
population of16 million inhabitants, 3 to 4million people work in the
cocoa sector(2). About 10 % of the country's cocoa is grown in the
rebel-controlled zone in the north; the rest is grown in the
government-controlled south.
This report – Global Witness's first report dedicated to the
cocoa sector in Côte d'Ivoire(iii) – documents how revenues from the
cocoa trade have contributed to funding armed conflict and how
opportunities for enrichment from cocoa through corruption and misuse
of revenues, both by the government and the rebel group Forces
Nouvelles (FN), continue to undermine the resolution of the crisis.
The information in this report is based on in-depth field
investigations conducted in Côte d'Ivoire, Burkina Faso and Togo in
June and July 2006. Global Witness staff interviewed a wide range of
sources in Abidjan in the government-controlled zone; in Bouaké and
Korhogo in the FN-controlled zone; in Bobo-Dioulasso in neighbouring
Burkina Faso, and in Lomé, the capital of Togo. Those interviewed
included cocoa sector officials, cocoa exporters, government officials,
diplomats, academics, members of non-governmental organisations and
journalists. Further research was carried out in France and from the
United Kingdom in 2006.
The profits each side derives from this trade are fundamental
to understanding why the main protagonists have not shown greater
commitment to solving the political crisis over the past four and a
half years. On the government side, the national cocoa institutions,
the majority of which were set up after President Gbagbo came to power
in 2001, have directly contributed at least 10.6bn CFA (US$20.3m) to
the war effort. The big cocoa and coffee exporters' union, the
Groupement Professionnel des Exportateurs de Café-Cacao (GEPEX), whose
members include multinational companies such as Cargill and European
companies such as ED & FMan Holdings Ltd, was represented on the
board of the Bourse du Café et Cacao (BCC), one of the national cocoa
institutions that decided to make this contribution to the war effort
(Section 5.1.1). The country's president, Laurent Gbagbo, and his
entourage, who retain control of the national cocoa and financial
institutions, have tapped into the profits from the industry, using at
least 20bn CFA (US$38.5m) of cocoa revenues to finance their war effort
(in addition to the 10.6bn CFA mentioned above). As one insider said:
"Of course the government used the cocoa money to buy weapons. Their
only mistake is trying to hide it. They should have been open about
it."( 4) (Section 5.1.2).
Corruption and political interference in the cocoa sector are
not new phenomena in Côte d'Ivoire, but the conflict has provided them
with a new dynamic. The deliberately complex structure of the cocoa
sector, the appointment of presidential allies to strategic positions
in the leadership of national cocoa and financial institutions, and the
consequent lack of transparency have presented the government with
numerous opportunities to misuse the profits from the trade (Section
6). Regardless of whether the government's attempts to defend its
territory against rebel groups can be considered legitimate, its
embezzlement of revenues from the cocoa sector to finance armed
conflict cannot be justified.
The government's determination to hold on to this cocoa-derived
wealth has been demonstrated by a pattern of intimidation against those
who have attempted to expose its abuses: journalists, auditors and
independent investigators have been threatened and attacked. Cases
include the abduction of a French lawyer who was auditing the cocoa
sector and the disappearance of journalist Guy-André Kieffer. Audits of
the sector have not led to an increase in transparency (Section 7).
On the other side of the zone de confiance, Global Witness
estimates the annual average of cocoa revenues accrued by the FN since
2004at 15.1bn CFA (US$30m)(5), because companies exporting cocoa from
the FN-controlled zone have to pay an export tax and a registration tax
(Section 5.2.1and Appendix II). The FN, despite being part of the
government of national reconciliation set up by the peace
agreement(iv), have progressively instituted their own parallel tax
system, notably on cocoa, which has enabled them to survive as a
movement and has allowed individual FN officials to enrich themselves.
The FN have imposed a cocoa blockade, preventing northern cocoa from
transiting south through the zone de confiance, so that they can secure
the taxes for themselves (Section 5.3.1). FN political and military
officials have raised a significant amount of money through a multitude
of official and unofficial taxes on cocoa and other goods. Global
Witness estimates that at least 77,500 tons of cocoa are exported every
year from the FN zone, first to Burkina Faso, then to Togo (Section
5.3.2and 5.3.3).
The chocolate industry has a responsibility to ensure that the
products it sells are conflict-free; it cannot remain a passive actor.
Instead, it should play a positive and pro-active role. Companies
should use their influence to ensure that money from cocoa levies is
not misused or diverted. This would involve performing extended due
diligence on all their cocoa purchases from the region to demonstrate
publicly that they are not inadvertently providing money which is being
diverted to the warring factions. Companies should also press for all
cocoa institutions' accounts to be audited and published, as a way of
ensuring that levies paid by exporters are not contributing to
financing the conflict.
Cocoa-exporting companies need to operate in a transparent way
and publish the payments they make to the Ivorian government and cocoa
institutions. In the government-controlled zone, companies, including
American multinationals such as Archer Daniels Midland (ADM) and
Cargill, continue to trade without appearing to question the use or
misuse of the significant taxes and levies they pay to the government
and cocoa bodies. Publishing their payments would contribute to
improving the management of cocoa revenues by the government and the
cocoa institutions, as well as increasing accountability of the
government to the people of Côte d'Ivoire, who have the right to know
how their natural resources are being used.
Finally, companies should audit their supply chain to find out
the exact origin of the products they are buying. For example,
companies buying cocoa from neighbouring Togo, through which much of
the Ivorian cocoa from the FN-controlled area is exported, may in fact
be buying Ivorian cocoa. Companies trading in cocoa from the
FN-controlled zone may be in breach of the OECD Guidelines for
Multinational Enterprises which require companies to "abstain from any
improper involvement in local political activities"(6) In the
FN-controlled zone, the willingness of companies to make payments to
the FN in order to trade in products from the zone is an additional
incentive for the FN to keep a stranglehold on northern cocoa and to
resist reunification of the country.
Although diplomatic and other sources may privately acknowledge
the links between the cocoa trade and the political crisis, peace talks
and agreements in Côte d'Ivoire have so far ignored the issue of
natural resources, as well as the corruption and mismanagement in the
sector which have enabled it to fuel the conflict. Global Witness
believes that governments and inter-governmental organisations, such as
the UN, involved in mediation and conflict resolution in Côte d'Ivoire
should address both sides' economic agendas directly, as these underpin
the crisis; a more open discussion of these economic motivations would
be an important first step towards a sustainable solution.
In the meantime, encouraged by a culture of impunity, both
sides are reaping the financial benefits yielded by the crisis. Many of
the main actors have actively profited from the effective partition of
the country: political division has meant economic division, and the
cake has been split in two. These divisions have severely threatened
the future of Côte d'Ivoire, its economy, and the well-being of its
population.
This report provides yet another example of a natural resource
contributing to and fuelling conflict. The international community
needs to address the issue of conflict resources more systematically,
not simply on a resource-by-resource or country-by-country basis A UN
Security Council definition of conflict resources would act as a
trigger for a coherent and proportional response to that trade,
including targeted sanctions and asset freezes where appropriate (see
text box: "The need for a trigger for international action to prevent
natural resources funding conflict"). The international community
should also require oversight of natural resource exploitation by
peacekeeping missions and by the new UN Peace building Commission in
cases where natural resources have been a contributing factor in a
conflict.
Notes:
(i) Timberand diamonds played a central role in funding the
conflict in Liberia, as documented in Global Witness reports Taylor
Made, September2001, and The Usual Suspects, March 2003.
(ii) The franc CFA is the currency used throughout francophone West Africa.
(iii) The Global Witness report, Making it work: Why the
Kimberley Process must do more to stop conflict diamonds, published in
November2005, included information on conflict diamonds from Côte
d'Ivoire.
(iv) The national reconciliation government brings together the main Ivorian political parties, as well as the rebels
(1) Ivorian Treasury website http://www.tresor.gov.ci/indicateur/cours_cafe_cacao.htm
(2) Ivorian Treasury website http://www.tresor.gov.ci/indicateur/cours_cafe_cacao.htm
(3) Global Witness interview with former cocoa official, Abidjan, June 2006
(4) Global Witness was unable to obtain the official FN revenue figures.
(5) The OECD Guidelines for Multinational Enterprises, General Policies, II.11.
CDE
convened a round table in March 2010 at which some of South Africa’s
leading experts spoke about the politics and economics of inequality. We
also invited Professor Paul Romer, an internationally renowned,
Stanford-based economist specialising in economic growth in developing
countries, to explore key issues surrounding inequality, growth and jobs
in developing country contexts.