Report No. 669a-IVC

Appraisal ofBanque Ivoirienne deDeveloppement Industriel (BIDI)October 21, 1975 FILE COPYDevelopment Finance CompaniesAfrica Division

Not for Public Use

Document of the World Bank

This document has a restricted distribution and may be used by recipientsonly in the performance of their official duties. Its contents may nototherwise be disclosed without World Bank authorization.

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Currency Equivalents.~~~~~

Currency Unit - CFAFCFAF 1 = US O.Q05US $ 1 = CFAF 200

ABBREVIATIONS

ADB African Development BankAFCOPA Association Francaise de Cooperation, de Formation et de

Promotion ArtisanaleBCEAO Banque Centrale des Etats de l'Afrique de l'OuestBDI Bureau de D6veloppement IndustrielBICICI Banque Internationale pour le Commerce et lIndustrie de

la C8te d'IvoireBIDI Banque Ivoirienne de Developpement IndustrielBNDA Banque Nationale pour le Developpement de ltAgricultureCAA Caisse Autonome d'AmortissementCCCE Gaisse Centrale de Coop6ration EconomiqueCCI Credit de la C6te d'IvoireDEG Deutsche EntwicklungsgesellschaftFAC Fonds dtAide et de CooperationKfW Kreditanstalt fur WiederaufbauOPEI Office National de Promotion de l'Entreprise IvoirienneSGBCI Societe Gen6rale de Banque de la CMte d t IvoireSONAFI Societe Nationale de FinancementSSE Small Scale Enterprise(s)UNIDO United Nations Industrial Development OrganizationUNDP United Nations Development ProgramsUSAID U. S. Agency for International Development

The CFAF Franc is tied to the French Franc in a ratio of 1 French Francto 50 CFAF Francs. The French Franc is currently floating.

BIDI Fiscal Year: October 1 - September 30

APPRAISAL OF THE

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL "tBIDI"

Table of Contents

Page No.

BASIC DATA .......... i - iii

SUMMARY .......... iv - v

I. INTRODUCTION ................. ,.,., 1

II ECONOMIC ENVIRONMENT ................. 1

Economic Growth and Structure ..... ............. 1The Industrial Sector ...... ................... 2

Growth, Investment, Efficiency . 2Employment. 3General Policies. 3Investment Code ............... ,.... 3Ivorianization ...... ..................... 4Prospects ....... ......................... 5

The Tourism Sector ...... ...................... 6Institutional Frame Work ..... ................. 6

III FINANCIAL ENVIRONMENT ...... ................... 7

Financial Institutions ...... .................. 7Interest Rates and BCEAO's Rules .... .......... 8Long-term Interest Rates and Foreign ExchangeRisk ............ ............................ 10

IV BIDI's ROLE AND ORGANIZATION ..... ............. 12

Ownership, Board, Management ..... ............. 12Departmental Organization and Staff .... ....... 12Policies and Lending Conditions .... ........... 13Volune and Characteristics of Operation ....... 13Client Characteristics ...... .................. 14Promotion .......... ........................... 15Project Work ........ .......................... 15Other Procedures ....... ....................... 16

THis report was prepared by Messrs. Philippe Nouvel and Djibril Sakho onthe basis of their mission to the Ivory Coast in November 1974.

TABLE OF CONTENTS (Cont'd)

V. BIDI FINANCIAL CONDITION ..... ................ 17

Portfolio Evaluation ...... ................... 17Resources ......... ........................... 18Financial Results ...... ...................... 18Financial Position ...... ..................... 19

VI. PROSPECTS ......... ........................... 19

BIDI's Medium-Term Goals and OperationalForecasts ....... ........................ 19

Resource Requirements ...... .................. 20Forecast Financial Results ..... .............. 21

VII. CONCLUSIONS AND RECONIENDATIONS .... .......... 21

List of Annexes

1. Ivory Coast - Origin of GDP at Current Prices2. Ivory Coast - Development in Priority Enterprises3. Ivory Coast - Summarized Balance Sheets of the Four

Commercial Banks4. BIDI - Board of Directors5. BIDI - Organization Chart6. BIDI - Statement of Policy7. BIDI - Loan Statistics8. BIDI - Problem Projects9. BIDI - Equity Investment Portfolio

10. BIDI - Borrowings11. BIDI - Income Statements 1971-7412. BIDI - Financial Ratios13. BIDI - Balance Sheets 1971-7414. BIDI - Projected Operations 1974-7915. BIDI - Projected Income Statements 1974-7916. BIDI - Projected Balance Sheet 1974-7917. BIDI - Projected Uses and Resources 1974-7918. BIDI - Estimated Disbursement Schedule

Basic Data on

Banque Ivoirienne de Developpement Industriel

(B I D I)

Year of Establishment: 1965

Ownership (as of April 30, 1975) ( CFAF million)

Class A Shareholders CFAF %

Ivorian Government 221.55 21.13 CEAO 59.85 5.7French Public Institutions

(BF2E, CCCE) 169.05 16.1IFC 74.55 7.1

525.00 50.0

Class B Shareholders

Chase Manhattan Bank 93.45 8.9Lazard Brothers 126.00 12.0Other Foreign Financial

Institutions 174.30 16.6Local Commercial Banks 56.70 5.4Private Ivorians 74.55 7.1

525.00 50.0

TOTAL 1=1O591.O9 100= 0

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Resource Position

(as of September 30, 1974)

(OFAF million)

Resources Uses

Equity 1,369 Net fixed assets 139Provisions 153 Equity Investments, Bonds 524Government loan 1,250 Non-discountable loans 7,284

Discountable loans 1,398Other loans:USAID 1,248Kfw 1 to 3 1,564 Total uses 9,3445CAA 2,025CCCE 750 Available for disbursements 14,619AID aitente 550 Undisbursed Commnitments 1 2,599DEG 1450CIDA 1,320 Available for new commitments 2,020Chase ManhattanBank 1,000

Kfw 4 1/ 900

BCEAO 1,385

Total resources 13,964

1/ Excluding discountable loans 623

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Historical Operational Data (CFAF million)

(FY ending September 30)

FY 71 FY 72 FY 73 FY_74

Approvals 1,926 2,337 2,933 3,044

Disbursements 1,397 1,764 1,977 3,144

Operating Results (CFAF million) FY 71 FY 72 FY 73 FY 74

Gross Income 303 491 595716

Administrative expenses 95 103 128 147

Financial Epenses 115 130 181 342

Net Profit 134 213 258 164

Net Profit/Average Net Worth (%) 16.2 22.4 22.5 12.5

Net Profit/Share Capital 19.1 30.4 36.9 15.6

Dividends % 5 6 7 7

Financial Position (CFAF million)

FY 71 FY 72 FY 73 FY 74

Total Assets 5,141 6,089 7,127 9,763

Net Worth 857 1,038 1,356 1,369

Total Debt/Equity 4.4:11 4.9:1 4.7:1 6.0:1

Debt/Equity as per BankDefinition 2.8:1 3.2:1 3.3:1 4.4:1

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SUMMARY

i. Sponsored jointly by the Ivorian Government, Lazard, and Chase,the Banque Ivoirienne de Developpement Industriel (BIDI) was established in1965 as a majority private-owned company to provide long- and medium-termfunds to the industrial sector in Ivory Coast. At the request of the Govern-ment, IFC took a 7.1% share in the Company and a seat on Board of Directors.

ii. Up to now, BIDI has been able to mobilize sufficient resources tocover its operations. A fast expanding business volume and good prospectsmotivated BIDI to request Bank financing last year. With this first loan toBIDI, Bank objectives would be (a) to fill a gap in the import financingrequirements of a competent intermediary for productive investment in theIvory Coast; (b) to strengthen BIDI's internal procedures in the area offinancial planning and control, and the economic aspects of project appraisal;and (c) to assist the institution's efforts towards a more developmental rolein promoting sound investments.

iii. Manufacturing growth in the Ivory Coast averaged 15% per annumduring 1960-73. This rapid development of industry was achieved under acomprehensive policy based on free enterprise and recourse to foreign capitaland management under an incentive system that is being reviewed presently inline with the Bank's recent recommendations. As a result, the industrialsector is for the most part in the hands of foreigners; at the end of 1971,it was estimated that 90% of manufacturing assets belonged to non-Ivorians.Ivorianization of capital and management of industrial firms has become amajor concern in recent years and the Government has taken various steps inthat direction. BIDI has steadily developed its share of financing directedto Ivorian-owned enterprises; 36% of its cumulative approved operations relatedto Ivorian majority-owned enterprises at the end of FY75, as against about 10%at the end of FY70.

iv. During its first decade of activity, BIDI, which has been nearlythe only source of long-term finance for industry and tourism, has expandedprogressively its operations from an average CFAF 0.5 billion in FY65-67 toan average CFAF 3 billion in FY73-74 and to about CFAF 4.4 billion in FY75.BIDI has developed a dedicated and promising Ivorian professional staff.It has also been successful in diversifying its sources of funds locallyand from abroad. Mlost of its borrowings have been obtained at concessionaryterms although with restrictions on the uses of funds. Low cost resourcescombined with rapidly expanding operations resulted in favorable profitabilityuntil FY74, when return on equity decreased from an average 22% to 13%, asa consequence of poor financing planning and hurried recourse to borrowing atunfavorable terms.

v. BIDI's appraisal work has progressively improved in the recent years,but needs further upgrading. Economic analysis of projects is almost non-existent. BIDI's management is aware of this weakness and it envisages to

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develop the economic capabilities of BIDI's staff, through training in thefield or abroad. Internal procedures regarding accounting, disbursement,and follow-up are satisfactory, but financial planning is still weak and needsmuch improvement.

vi. BIDI's portfolio of CFAF 11 billion (July 1975), well diversifiedamong industrial sectors, reflects the orientation of the Ivorian economy.Its involvement in the Tourism sector will progressively be reduced, as aresult of the Government's decision, concurred by the Bank, to have long-termfunds to hotels be channelled in the future through Credit de la Cote d'Ivoire(CCI), a majority public development bank mostly engaged in financing housing,consumer goods, and small businesses. CCI is also the recipient of Bank fundsfor a Tourism Development and a Small Scale Enterprise Projects that wereapproved in May and August 1975.

vii. Given development prospects of the Ivorian economy, BIDI's businessoutlook appears promising. At the beginning of FY75 BIDI had CFAF 2 billionavailable for new commitments. Commitments of non-discountable loans through1977 should total CFAF 10.5 billion and given BIDI's projected cash generationand use of revolving funds (CFAF 2.8 billion), its net resource gap over theperiod amount of CFAF 5.7 billion. A Bank loan of $8 million would coverabout a third of BIDI's resource requirements. Ultimate recipients of theBank loan would be mainly medium-scale enterprises; small enterprises willbe assisted by the Bank through the above-mentioned loan to CCI.

viii. The project is suitable for a Bank loan of $8 million equivalentto BIDI, with a flexible amortization schedule conforming substantially to theaggregate amortization schedules of subprojects, none of which should exceed15 years. BIDI would charge a minimum of 11%; in addition, subborrowers wouldpay a service tax of 19.06% on interest and commissions, bringing the cost oflong-term funds provided by BIDI to 13% at least. The free limit would beUS$200,000 equivalent, with an aggregate of $2 million.

I. INTRODUCTION

1.01 The Banque Ivoirienne de Developpement Industriel (BIDI) wasestablished in 1965 jointly by the Ivorian government, Chase Manhattan Bankand Lazard Brothers. At the request of the Government, IFC subscribed 7.1%of the initial share capital of CFAF 750 million, and later took a seat onthe Board. Other foreign institutions (CCCE, DEC in particular) and thelocal cormercial sands are also shareholders of BIDI (See Basic Data).

1.02 The company, which has been nearly the only domestic source oflong-term finance for industry and tourism in the Ivory Coast has progressivelyexpanded its operations through granting of long-term loans, investment in sharesand associating with commercial banks in medium-term discountable loans.

1.03 Up to the present time BIDI has been able to mobilize sufficientdomestic and foreign resources to cover its operations. However, an expandingbusiness volume and role coupled with increasing difficulty in raising long-term resources motivated BIDI to request Bank financing. A mission visitedIvory Coast at the end of 1974, to appraise (a) the proposed loan to BIDIand (b) Credit de la Cote d'Ivoire "CCI', a public financial institution,which is the channel for Bank funds for a Tourism Development Fund Projectand a Small Scale Enterprise Project, that were approved in May and August1975 (see Report Nos. 666a IVC and 780a-IVC of April 28, and July 21, 1975).This report reviews BIDI's performance, role and prospects and recommends aBank loan of $8 million for the financing of medium-scale productive enter-prise.

II. ECONOMIC ENVIRONMENT

Economic Growth and Structure

2.01 An analysis of the economic situation of the Ivory Coast is providedin the report "Current Economic Situation and Prospects of the Ivory Coast"dated April 11, 1974. A basic economic mission visited Ivory Coast in June-July1975 to evaluate the country's long-term prospects in the context of the draft1976-80 Development Plan.

2.02 With a population of 5.6 million, Ivory Coast had an annual GNPper capita of about $340 in 1972. During its first decade of independence,the country experienced remarkable economic growth with an average annualincrease of GNP in real terms of 7.5%. Factors contributing to rapid growthwere the Government's liberal and pragmatic economic policies, the avail-ability of ample land and timber resources. the existence of a large pool oflabor including immigrants fromi Sahelian countries and, during the latesixties, rising commodity export prices. This growth was accompanied bysubstantial structural changes. In terms of value added, the service sectorand the manufacturing sector gained in importance (Annex 1).

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2.03 The Government has, however, become increasingly concerned withthe possible effect of the rapid growth on income distribution among thepopulation and regional income distribution. Thus, to reduce inequalities,recent salary raises have been graduated from 26 percent for the lowest to5 percent for the higher paid workers. A number of agricultural projectsare designed to narrow the gap between urban and rural incomes and to reduceregional income disparities. In the same vein producer prices were substan-tially increased in recent years.

2.04 hLowever, the next Plan (1976-S0) will need to focus more sharplystill on problems of urbanization, prospects of employment in both ruraland urban areas and income distribution. To assist the Government inthese directions, a special Bank employment mission, which included ILOstaff, visited the Ivory Coast. The mission's report, "Ivory Coast: SpecialReport on Employment" (Report No. 279-IVC, July 1974), identified the majoremployment problem as one of growing imbalances with manpower supply (includ-ing immigration) shortages expected in rural areas while surpluses in urbanlabor markets will develop in the absence of corrective action. The reportplaced particular stress on the informal or traditional sector which hasthe greatest labor absorption potential.

2.05 Prospects for sustained economic growth remain good: diversifica-tion of agriculture is making good progress and industrial growth, which sofar has centered around enterprises of limited size to serve the still smallbut growing domestic market, is expected to rely to a greater extent onexports of more highly processed agricultural products. An average growthrate of GDP of 6% in real terms is considered achievable during the balanceof the seventies.

The Industrial Sector

2.06 Growth, Investment, Efficiency. The industrial sector is analyzedin depth in "Current Status and Prospects of the Industrial Sector in theIvory Coast" (Report No. 553-IVC dated February 4, 1975). Manufacturingoutput grew by about 15% per annum during 1960-73 and its share in GDP inthe Ivory Coast rose from 4 percent in 1960 to 13 percent in 1972. Thisrapid growth was based on the parallel development of export-oriented agro-industries and import-based industries, which have expanded at the sameaverage rate over the period 1960-72. Industry in the Ivory Coast startedfrom a very small base in 1960 and is still at an infant stage: manufacturingoutput was around CFAF 150 billion in 1972, and the sector's estimated assetswere CFAF 74 bill-ion, at the end of 1972. In a number of subsectors capacityis under-utilized as it is not always possible to adapt industrial equipmentto the dimensions of a limited market. During 1966-72, employment growth inthe manufacturing sector was only about 70% of the growth in value added atconstant factor prices, reflecting gains in labor productivity. which isnot considered low by Africari standards. Based on an analysis of 126 enter-prises, Ivorian industry shows an acceptable average profitability with anaverage post-tax return on equity of 12.2%.

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2.07 Employment. Manufacturing employed about 38,000 persons or only1.5% of the total labor force in 1972. However, employment in the manufac-turing sector represented 13% of all salaried employment in the modern sectorof the economy. The growth rate in industrial employment was 10.6% per yearduring the period 1966-72.

2.03 General Policies. The Ivory Coast has followed an industrial policybased on encouragement of the private sector, xwith public sector industrialinvestment relatively minor and confined to a few branches. Political stability,active policies of industrial promotion and various incentives have inspiredthe confidence of investors. The monetary framework allowing freedom of for-eign exchange transfers, and the existence of relatively well developed infra-structure are other factors that explain the rapid industrial developmentof the Ivory Coast. However, policy and criteria for public capital partici-pation in industry have not always been clear and need to be more carefullyassessed. Further steps are also needed to develop a skilled Ivorian laborforce at all levels and to foster the emergence of Ivorian entrepreneurs.The steps being taken to improve the situation are discussed below (paras.2.13-2.15).

2.09 Investment Code. The major instrument of the Government's indus-trial policy is the Investment Code issued in 1960 which offers incentivesconsisting of exemptions from duties on imports, taxes and other levies for aperiod of up to ten years. Enterprises approved under the Investment Code,called "priority enterprises", accounted for about two-thirds of industrialvalue added in 1971. A special Investment Code for tourism projects wasissued in 1973. New large projects in industry and tourism that areconsidered of particular developmental importance may get special incentivestailored to each particular case under "establishment conventions" which canguarantee tax stability for periods of up to 25 years.

2.10 Priority firms are subject to direct supervision by the Directorateof Industrial Development (DDI) in the Ministry of Planning which preparesannual reports on the performance of each priority firm, including emphasison the implementation of investment programs, production targets and employ-ment of Ivorian personnel.

2.11 Over the past few years, the Investment Code has been subject tovarious criticisns; in particular, the Bank Industrial mission in 1973 foundthat: (i) the Code has been applied too liberally by giving the full ten-yearduty exemption on imported inputs; (ii) Government supervision of priorityfirms has been inadequate; (iii) duty-free imports of raw materials grantedto priority firms discourage local production or partial processing of inter-mediate goods; (iv) although not discriminating against small enterprises,per se, the Investment Code mainly benefited large firms- and (v) the Invest-ment Code tended to favor the installation of new equipment over fuller useof existing capacity.

2.12 A new Investment Code under preparation envisages a number ofimprovements. Firstly, reflecting recent practice, it will make incentivesand the period for which they are given more discretionary, after carefulexamination of the merits of each project. Secondly, the new Code willreflect reconsideration of the policy of exemption or reduction in importduties on capital equipment and intermediate materials. Thirdly, the useful-ness of introducing export subsidies on all industrial exports will bereconsidered. One problem is the need to upgrade the quality of projectreview by Government decision-makers. As a first step to directly dealwith this, the Bank is planning to sponsor a two-week seminar on economicevaluation of projects to be held in Abidjan in 1976 with participants fromthe Ministry of Planning and the Ivorian development banks. Follow-uptraining will, no doubt also be required.

2.13 Ivorianization. Indigenous enterprises participate only modestly innon-agricultural sectors of the economy. In the secondary sector, the growthof industry has come largely as a result of investments by foreign corporationsand most plants still require expatriate management and senior staff. Onlylimited amounts of domestic savings have been channelled into industry andexternal capital has, therefore, financed the bulk of its development. Atthe end of 1971, it was estimated that 90% of assets in the modern manufacturingsector were controlled by non-Ivorians. Moreover, since the educationsystem produces few technicians and trained workers, substantial expatriatelabor was employed in the secondary sector. Non-African employment waslargely predominant in the higher paid skilled and managerial positions inthe private sector.

2.14 In 1971, only 25% of the managerial and professional technical staffof enterprises were Ivorians or other Africans; out of the 2,573 managementpositions in the private and semi-public sector, Ivorians held 363, otherAfricans 234 and non-Africans 1,976. Virtually all management positionsrequiring upper secondary level education were held by non-Africans. Whilethere has been some progress in Ivorianization since then, the basic patternhas not changed substantially.

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Table 1

Structure of Salaried Employment in the Private Section in 1971 (%)

Non-IvorianIvorians Africans Non-Africans Total

Management .3 .2 1.5 2.0Professional Tech'nical Personnel .5 .2 2.1 2.8Foremen 2.1 .6 1.7 4.4Other Supervisory Personnel 4.8 1.2 1.1 7.1Subordinate Personnel 5.4 3.7 - 9.1Skilled workers 8.0 3.0 .1 11.1Semi-skilled workers 13.4 7.9 - 21.3Unskilled workers and

apprentices 13.4 28.8 - 42.2

47.9 45.6 6.5 100.0

2.15 While the Government will continue to encourage foreign investment,"Ivorianization" of the economy is also an important goal. Ivorianizationaims at increasing participation of Ivorians in economic and social life by(a) increasing Ivorian ownership in existing enterprises, (b) increasingIvorian participation in managerial positions and (c) promoting Ivorian-ownedenterprises. The Economic Development Plan (1971-75) declares as one of itsfundamental objectives the increased participation of Ivorians in economicactivities. Although the Government has not specified quantitative targetsfor its promotion program of Ivorian enterprises, it has: (i) set up acomprehensive scheme to promote small-scale Ivorian enterprises and facil-itate their access to credit; (ii) participated in banks, industrialand commercial enterprises through SONAFI, a public financial institution(para. 4.12); (iii) required enterprises benefitting from the InvestmentCode to present plans for Ivorianization of personnel; (iv) planned theestablishment of a stock exchange which would help develop Ivorian share-holdings in private enterprises; and (v) reserved new investments incertain sectors to Ivorians. It is also planned that in the future localcontractors will be given preference for public procurement and construction.However, the capital and managerial needs of large industrial companies willprobably continue to be met substantially by foreign enterprise in the nextfew years.

2.16 Prospects. Value added in industry is projected to grow at an annualrate of nearly 13% during 1974-80. If the two large paper pulp and iron-oreprojects would be in production by 1980, the industrial sector will develop atthe faster rate of 14.4% during this period. Since industry is forecast to growmore rapidly than tne total economy, its proportion in GDP is projected to

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increase from 13%o (1972) to 15% in 1975, and to about 19% in 1980. Processingof local agricultural and forestry raw materials for export will make a largercontribution than before to industrial growth. As a result, it is projectedthat by 1980 industrial exports would represent more than 40% of total exports,as against 24% in 1972.

The Tourism Sector

2.i7 TourLst arrivals increased at a rate of about 14% between 1970 and1974. Receipts from travellers to the Ivory Coast in 1973 generated someUS$19.5 million in gross foreign exchange earnings, representing about 1.5%of total foreign exchange receipts from goods and services. About 3,100persons are employed directly by the tourism industry and possibly an equalnumber is employed in related industries.

2.18 The total hotel capacity in Ivory Coast has doubled since 1970 toabout 3,800 rooms by end 1974. About two thirds of these rooms are of inter-national standard, of which about 500 on the beach near the capital. TheGovernment has provided about 60% of the financing in the hotel sector up to1973 but owns only 44% of hotel rooms. Average occupancy of hotels in Abidjanhas been quite high.

2.19 The economy is expected to support a steady growth of the business-related hotel demand in Abidjan plus some secondary markets. It is reasonableto predict a demand for about 1200 rooms in Abidjan between 1975 and 1980.Annual foreign visitor arrivals would be about 160,000 by 1980 of which twothirds would be business travellers. A Bank loan to assist in the developmentof the hote:L industry was signed in June 1975.

Institutional Framework

2.20 Government institutions directly affecting industry include Depart-ments in the Ministries of Planning and Finance, which coordinate throughinterministerial committees 1/. lWithin the Ministry of Planning, theDirectorate of Industrial Development (DDI) is responsible for appraisingprojects submitted by investors applying for Investment Code advantages,and for submitting annual reports on all priority firms. The Department ofDevelopment Studies (DED) is concerned with Industry as part of the prepara-tion of the five-year plan, and the Department of Regional Planning (DATAR)deals with regional aspects of industry. Within the Ministry of Economyand Finance, the most important department for industrial policy is theGeneral Dircutorate of Economic Affairs and External Economic Relations(DO-AEREE) which is responsible for import licensing,price control, and tradenegotiations.

1/ Financial inszitutions are described in Part III.

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2.21 Industrial promotion is done by "The Office of Industrial Develop-ment" (BDI) which serves as a link between potential foreign investors andthe government; it has three agencies in Europe. The Office National dePromotion de l'Entreprise Ivoirienne (OPEI) was established in 1968 to providetechnical and managerial assistance to mostly small Ivorian businesses. Ithas recently been reorganized (following Bank assistance), and its activitiesare being focussed in selected industrial branches. BDI set up in 1972 anorganization, (BISTI), 1/ to match the subcontracting capabilities of Ivorianswith foreign demands, mainly from Europe; its impact has been modest so far.Finally, the Ivorian Center for Foreign Trade (CICE) has a general responsibilityfor export promotion, e.g., by participation in foreign affairs. UNIDO isassisting BDI, OPEI and CICE.

III. FINANCIAL ENVIRONMENT

Financial Institutions

3.01 The Ivory Coast is a member of the Western Africa Monetary Unionestablished in 1962 and composed of six countries with a common centralbank, the Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO). Bankingand credit institutions in the Ivory Coast include four commercial banks(BICI, SGBCI, SIB, BIAO), 2/ three development banks (BIDI, CCI, BNDA) andtwo leasing institutions. In addition, there is a public institution, CaisseAutonome d'Amortissement (CAA) which manages public debt, holds and managespublic deposits and mobilizes local resources through issuing of tax-freebonds. Another public institution, Societe Nationale de Financement (SONAFI)was set up in 1962 to take direct participation in undertakings of nationalinterest; it became involved in the small-scale Ivorian enterprise sector in1972 when the Government established within SONAFL a Participation Fund tomake quasi-equity available to small Ivorian enterprises. The Governmentalso established in 1968 a Guarantee Fund to provide guarantees to creditsgranted to small Ivorian enterprises. Finally, a stock exchange is expectedto be established soon.

3.02 The financial sector has been progressively Ivorianized; theGovernment has a 21.1% share in BIDI, controls 75%, of CCI and of BNDA, andhas participations of 35% or more in three of the commercial banks (still

1/ Bourse Ivoirienne de Sous-Traitance Internationale.2/ BICICI: Banque Internationale pour le Commerce et l'Industrie en C6te d'Ivoire;

SGBCI: Socift6 Generale de Banque en C6te d'Ivoire;SIB: Societe ivoirienne de Banque;BIAO: Banque Internationale pour l'Afrique Occidentale;BIDI: Banque Ivoirienne de Developpement Industriel; CCI: Credit de la Cote

d'Ivoire; BNDA: Banque Nationale pour le Developpement Agricole.

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dominated by French interests associated with American, German and Italianbanks). All those banks have an Ivorian as General Manager,; Ivorianiza-tion of their professional staff is increasing progressively.

3.03 The commercial banks provide short- and medium-term 1/ financingto all sectors of the economy; they have branches in 37 towns all over the

country, in addition to those in Abidjan and its suburbs. SGBCI is the

largest, with 342O of the commercial banks' total assets of CFAF 113 billion,as OL October 1974 (see Annex 3), and a total staff of 450.

3.04 Medium- and long-term lending expanding sharply in the recent years;

most of industrial medium-term loans are provided by the commercial banks,individually or in pool. BIDI plays a major role in long-term lending toindustry, whereas CCI is mostly engaged in loans to housing, vehicles andsmall equipment for consumers, and financing of craftsmen and small enterprises.BNDA specializes in agricultural and agribusiness lending. BIDI and CCI'slong-term outstanding loans represent about 70% of total long-term loans

recorded at BCEAO.

3.05 A few years ago, BIDI engaged itself in tourism long-term financing,

but did not develop a strong appraisal capability in that sector. Given CCI'spublic character, its experience with housing and real estate, and also BIDI's

reluctance to further engage itself in this sector, the Bank endorsed theGovernment proposal that Bank assistance to hotel financing be processedthrough CCI. Lending to small enterprises (loans below CFAF 25 million each)has increased sharply during recent years, from about CFAF 300 millionapproved in 1970 to over CFAF 1 billion approved in 1973. The bulk of theseloans relates to trade or service activities. Given CCI's involvement in

the small-scale enterprise sector and the forecast development of a closecooperation between CCI and the technical assistance agency (OPEI), it was

considered appropriate to use CCI as a channel for Bank funds for small-scaleenterprises under the Bank loan to that sector. Long-term lending to mediumand large-scale industrial enterprises will remain BIDI's major responsibility:it may also continue to participate in tourism financing through participatingin medium-term discountable loans extended by the banking system.

Interest rates and BCEAO's rules

3.06 Interest rates and credit distribution are controlled by BCEAOthrough the discount system. BCEAO is currently in the process of implementinga series of fundamental reforms, aiming at (i) tying the Monetary Union'sinterest rate policy more closely to the money markets in Europe, both todevelop mobilization of local savings and to reduce the incentive for foreignenterprises to obtain cheap local finance; (ii) linking credit allocation tosectoral needs; and (iii) encouraging access to credit by national enterprises.in addition a money market is being created. Rates of interest charged by

/ Medium-term loans: over two years and up to seven years (up to fiveyears until 1972); as from January 1976, the maximum duration of medium-term Loans will be 10 years.

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banks are determined by adding to the discount rate spreads which vary accordingto the nature and term of credit extended. Until recently, BCEAO had a singlediscount rate, which was raised from 3.5% to 5.5% in early 1973. As fromJuly 1975, two discount rates exist. The priority discount rate (5.5%)applies to agricultural short-term financing, loans to national SSEs (definedas SSEs with outstanding borrowings below CFAF 20 million), and loans toindividuals for housing. The "normal" discount rate (8%) applies to otheroperations. As a result, interest rates will vary between a minimum of6.50% and a maximum of 13%. Interest rates for term-deposits are determinedby adding to a basic rate of 3.25% minimum spreads, depending upon the amountand the term of the deposit. As from January 1976, the control of volumeof credit by BCEA0 will be changed from a system based on discount ceilingsfor banks and individual enterprises to a system based on allocating to eachcountry a ceiling for each country's recourse to BCEAO's resources, and withinthis ceiling, allocating specific ceilings for the Government and publicinstitutions, the Treasury, and the financial institutions; in addition,BCEAO's prior approval of all lending in excess of CFAF 100 million will berequired; previously, there have been discount ceilings for banks and in-dividual enterprises. In addition, BCEAO may determine for each commercialbank's lending minimum sectoral ratios, and minimum ratios for credits to beextended to enterprises run by nationals.

3.07 Regarding medium-term discountable loans, which are generallyused to finance local costs and cover the import component of an investmentwhen external long-term loans and supplier's credits are not available,they cannot represent more than 50% of the project cost (general rule) or65% for industrial enterprises, or 90% for loans to national small-scaleenterprises. Loans for purchase of used equipment or for purchase ofenterprises cannot be discounted.

3.08 BCEAO influences indirectly the allocation of long-term loansthrough its directorship in development banks' boards and the medium- andlong-term commitment ceilings for each bank; for development banks, theseceilings are defined by BCEAO as 150% of the sum of the bank's equity(minus fixed assets and equity investments), and its long- and medium-term resources. Medium-term rediscountable loans guaranted by the Governmentare not included in the ceiling.

3.09 Although this system has not discriminated against small- andmedium-scale enterprise, it has been in fact difficult for small enterprisesto utilize discount sources: (i) small entrepreneurs are not able to submita project proposal dossier, and it is a costly burden for the banks toprepare one, in view of the relatively small amounts involved; (ii) they arevery often incapable either of showing financial statements or of justifyingthe minimum net working capital required; (iii) a minimum proportion of self-financing of 20% requested until now may have barred small entrepreneurswho also suffered difficulties in financing the difference between the projectcost and the maximum proportion rediscountable at BCEAO; (iv) regarding

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short-term loans, commercial banks have usually reached their rediscount ceilingin recent years and have even been obliged to borrow abroad funds for shortperiods at interest rates as high as 12-13%. This proved detrimental tosmall enterprises since the banks preferred to use their discount possibilitiesfor large firms. All these factors explain that, although the volume offinance provided by the financial institutions to small Ivorian enterprisesexpanded fast 'r recent years, most of it was non-redicountable and thuscarried the hI,gher interest rates. The reform being implemented by BCEAOshould alleviate most of these difficulties.

3.10 A 19.05% tax (Taxe de Prestation de Services - TPS) is charged oninterest. Banks collect this tax for the Government. However, CCI and BNDAloans are exempted from that tax; BIDI's loans were exempted until February1975. According to the recent Tax Code, enterprises may theoretically deductthe amount of this tax from other taxes due on their operations; in practice,this is not possible for a variety of reasons: very few enterprises are awareof this possibility; also, enterprises who do not pay the value added taxesbecause they are exempt due to their export activity or because they areexempted by the Investment Code cannot claim this deduction; in other cases,the tax administration has even refused to process it, or long delays havebeen encountered in the processing. Given the complexity of the tax system,and the difficulty of assessing the impact of a change in the TPS system onGovernment revenues, it was suggested to the Government that the TPS situationbe studies with a view to clarify and harmonize the tax treatment as betweeninstitutions; there is, however, no indication that the system will be modifiedin the near future.

Long-term Interest Rates and Foreign exchange Risk

3.11 BIDI's long-term lending rates have progressively been raised andnow most of its loans are made at 11% (before TPS tax) as recommended by theBank during the project preparation. CCI's rates by comparison have rangedfrom 6.75% - 11% for housing, and 7% - 9% for the few long-term industrialloans it has made from CAA or CCCE funds. Until now, industrial privateenterprises in francophone Western Africa countries have been accustomed toborrow in CFAF Francs which are tied to the French franc, or in some cases,in a specific foreign currency in the event of using suppliers credits. TheIvorian Government had assumed the foreign exchange risk on all Ivoriandevelopment banks' borrowings in currencies other than CFAF francs and Frenchfrancs, until now. However, during negotiations for the SSE Project and theBIDI Project, the Government has expressed the view that private borrowers offoreig-a funds should in the future, and whenever feasible, bear the totalcost of the capital channelled into the economy. As a consequence: (i)subborrowers under the Small Scale Enterprise Project are expected to takethe foreign exchange risk on Bank funds; however, if this proves a serioushandicap for the numerous SSE subborrowers, the Government may decide toassume the risk possibly with an appropriate fee as compensation; and (ii)in the case of BTDI, subborrowers are expected to assume the full foreign

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exchange risk. As for the Bank's Tourism Development Project, which wasnegotiated before the Government modified its general policy regarding theforeign exchange risk, subborrowers will pay a fee of 1% to the Governmentfor its assumption of the risk. For this Tourism Development Project, theGovernment (and not CCI) was the direct borrower of Bank funds, and the termsof sub-loans of hotel promoters will be much longer than for industrialenterprises under the BIDI Project; this explains the different treatment ofthe foreign exchange risk.

3.12 Hotel promoters under the Tourism Development Project will pay toCCI an interest rate of 10.5%, plus the 1% fee to the Government for theforeign exchange risk coverage. Small scale enterprises will pay 12% toCCI: a 3.5% spread was considered the minimum necessary to cover CCI'sadministrative expenses and the minimum required risk premium to cover anassumed 5% fiscal default rate, and include a small profit element. Concern-ing the proposed loan to BIDI, sub-borrowers will pay an 11% interest rate---leaving a 2.5% spread to BIDI on Bank funds, plus the TPS tax; as a result,the final cost of long-term funds from the proposed Bank loan for industrialenterprises other than SSEs will be about 13.1%. During negotiations, BIDIagreed that its long-term lending rate will be 11% at least, and that the finalcost of its long-term funds will not decrease below 13%. The table belowcompares the on-lending terms of Bank funds channelled to industrial and tourismenterprises in the Ivory Coast.

TourismDevelopment SSE BIDIProject Project Project

Borrowers Government-CCI CCI BIDI

Cost of Bank funds 8.5% 8.5% 8.5%

Spread to the intermediary 2% 3.5% 2.5%

Foreign exchange risk 1% assumed by the subborrower

TPS tax - - 2.1%

Final cost to the subborrowers 11.5% 12% 13.1%

The 13% minimum cost of Bank funds to medium-scale industrial subborrower isprojected to result in an adequate real positive cost of capital.

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IV. BIDI's ROLE AND ORGANIZATION

4.01 BIDI's broad objectives according to its Statutes and Statementsof Objectives and Management Policy are to encourage the development of pri-vate industrial enterprises in the Ivory Coast, to promote the participationof foreign and comastic caDital in the industrial development of the country,and to he lp develop a capital market.

Ownership, Board, Management

4.02 Ownership. There has been no change in BIDI's ownership since itscreation in 1965. BIDI's main shareholders are: the Government (21.1%),Lazard Bros. (12%) and Chase Manhattan Bank (8.9%); CCCE (10.7%) and IFC(7.1%). Other shareholders include BCEAO (5.7%), 3 local commercial banks(1.8% each) and miscellaneous foreign institutions (22%) and private Ivorians(7.1%). In April 1974, BIDI's shareholders declared a 50% stock dividendwhich raised the paid-in share capital from the initial CFAF 700 million toCFAF 1,050 million.

4.03 Board of Directors and Executive Committee. Annex 4 shows thecomposition of BIDI's Board and Executive Committee. BIDI's Board ofDirectors normally meets only twice a year to discuss the company's annualreport, financial statements and proposals for distribution of profitsand to convene the Annual General Meeting. All other business is conductedby BIDI's Executive Committee (EXCOM). The delegation of powers was renewedin 1970 for a second period of five years and renewed again recently foranother five-year period. BIDI's Executive Committee meets as often asrequired, usually once every three months. It considers, and decides onquestions of policy arising between Board meetings and decides on BIDI'slending and investment proposals. Discussions at the EXCOM level are thoroughand decisions on loan applications are based on sound financial principles.The representatives of Lazard, Chase, and CCE, whose attendance has beengenerally good, contribute substantially to the work of the EXCOM.

4.04 Management. Mr. Alphonse Diby has been General Manager sinceMarch 1970, after five years as Deputy General Manager. Mr. Diby, whojoined BIDI in 1965, has proven to be a competent leader for the com-pany. With the help of BIDI's foreign partners BIDI has become a stronginsiitution, respected by the business community and free from politicalor narrow interest group influence in decision making. Mr. Diby's Deputy,since mid-1974, is Mr. Bamba who has been a staff member since 1967 andwho succeeded a CIDA seconded Canadian as Deputy General Manager. Mr. Bambais young (34), but has a good knowledge of BIDI's operations and clientele,and is expected to perform his functions satisfactorily.

Departmental Organization and Staff

4.05 BIDI's organization chart is depicted in Annex 5. As of November1974, BIDI's staff totalled 37, of which 18 are professional, including two

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Germans serving in the Internal Control and Investment Departments. BIDI haslong relied on foreign technical assistance from various sources (CCCE, CIDA,Chase, German aid), but has now developed a young group of Ivorian profes-sional staff which is dedicated and promising.

4.06 The Investment Department is the core of BIDI. It comprises sevenprofessionals: five Droject officers in charge of both appraisal and follow-up

of investments, an engineer and a lawyer. The project officers are mostlyuniversity graduates who were trained by CCCE or by Chase Manhattan Bankafter a six-month to one year probationary period with BIDI. BIDI's programfor training and recrument of additional staff appears satisfactory, althoughmore attention should be paid to developing economic appraisal capabilitiesthrough training (see para 4.17).

4.07 The Finance and Administrative Departments are staffed with competentIvorians. The Finance Department is in charge of the company's accounts,loan disbursements and collection. It also has responsibility, under guidancefrom general managment, for financial planning - a function performed poorlyuntil now (see para 4.19). The Administrative Department is responsible forpersonnel management and administrative expenses.

4.08 The Internal Control. This Department is directly attached to theGeneral Manager and controls the execution of the budget and clears loandisbursements. It performs these functions in a satisfactory manner.

4.09 Department of Research and Studies. This Department is staffedwith 2 young Ivorian professionals formerly in the Investment Department.They have responsibility for market studies and as such are expected toassist the investment officers in the appraisal of projects. It is projectedthat this Department will also have responsibility for project promotion(see para 4.16).

Policies and Lending Conditions

4.10 BIDI's operations are directed by its Statement of Objectives andManagement Policy (Annex 6). This Policy Statement conforms in most respectsto policy statements adopted by other development finance companies. It in-cludes the following guidelines. BIDI's maximum single commitments arenormally limited to 15% of BIDI's equity plus the Government subordinatedloan. BIDI's equity participation shall not normally exceed 30% of the sharecapital of the enterprise in which it invests. The total equity portfolio islimited to BIDI's equity. BIDI shall not assume the foreign exchange riskon its borrowings.

Vo'lume and Characteristics of Operation

4.11 A summary of BIDI's operations appears in Annex 7. Since itscreation in 1965, BIDI has made loans for a total of CFAF 20.1 billion andequity participations totalling CFAF 0.8 billion. Operations grew from an

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annual average of CFAF 0.5 billion in 1965-67 to an average CFAF 1.5 billionin 1968-70, then steadily increased from FY71 (CFAF 2 billion) to FY73 (CFAF3 billion), levelled at this volume in FY74, due to temporary lack of resourcesand a slight slowdown in the economy, and expanded to CFAF 4.4 billion inFY75. During these eleven years, BIDI has assisted 224 enterprises, mainlythrough granting long-term loans (i.e. with an average duration of 9 years),which represent 60% of total operations. Its total portfolio at end ofFY74 (September 30, 1974) was CFAF 9 billion, of which CFAF 6.6 billionwas in long-term loans, i.e. about 55% of total outstanding long-term loansin industry, tourism and services in the Ivory Coast. In fact, except fora few loans granted by CCI from CCCE funds or by SONAFI, BIDI has been theonly long-term lender in Ivory Coast for industry and tourism. BIDI's loansand equity investments of CFAF 8.3 billion over FY75 to FY74 related toprojects totalling nearly CFAF 48 billion; other sources of external --mainly medium-term rediscountable credits--totalled CFAF 22 billion, whilepromoters contribution and internal cash generation amounted to CFAF 17.8 bil-lion (37% of total investment cost). BIDI's equity investments have averaged 4%of total operations in FY70 to FY75. There are not expected to develop stronglymainly because of the major role played by SONAFI in the field.

4.12 Geographical Distribution of Operations. About 75% of BIDI's opera-tions and business volume have been located in the Abidjan province. Another5% of loans have been granted to clients located in the Bouake region and theremaining 20% are scattered all over the country. This allocation of resourcesreflects the predominance of Abidjan in the industrial activities in the IvoryCoast; in 1973 70% of the industrial production came from the Abidjan area.Nearly all tourism projects are also located there. The Government is puttingemphasis on development in several poles in the country (Bouake, Man, San Pedro,Korhogo), and it can be expected that BIDI's proportion of operations outsidethe Abidjan area will increase in the coming years.

4.13 Sectoral Distribution. BIDI's portfolio is well diversified amongindustrial sectors and reflects the orientation of the Ivorian economy; 16%of operations have been directed to the textile sector, 12% to processing ofagricultural products, 13% to timber and furniture enterprises and 8% haveconcerned tourism.

Client Characteristics

4.14 Most of BIDI's financing has gone to medium-sized enterprises:75% of operations, by volume, were above CFAF 50 million each; loans andequity investments below CFAF 20 million each represented 8% of the totalin volume, but 42% in number. However, in many cases, loans below CFAF 20million each represent BIDI's share of a joint financing scheme. A surveyof the 47 proects approved during five EXCOM meetings in FY73 and FY74 showsthat only six projects could be related to enterprises with assets below CFAF40 million. Among the 47 enterprises reviewed, 16 related to service activitiesand 31 to manufacturing. Of the latter, 17 projects concerned processingmainly of local raw materials. Thirteen projects were export oriented, and 18

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served the domestic market. Although BIDI's Statement of Policy does not definea minimum limit for its commitments, a strong development of its operations infavor of small-scale enterprises appears improbable, given CCI's recognized rolein this sector (see para 3.05). BIDI has been, and will continue to dealprimarily with medium-scale enterprises; its influence on large-scale proj-ects is relatively limited since its maximum normal commitment in a singleenterprise is presently about CFAF 400 million ($2 million).

4.15 More than half of BIDI's operations by number (and 60% in volume)have been related to the creation of new enterprises. The share of financingdirected to majority Ivorian-owned enterprises has steadily increased inthe recent years and now represents 36% of financing granted, which demonstratesBIDI's efforts to assist Ivorian enterprises, since the proportion of industrialfirms in the hands of foreigners is estimated to be higher than 70%.

Promotion

4.16 In July 1972, BIDI established with French public and privateconsulting firms a subsidiary Societe D'Etudes de Developpement Industriel(SEDI), with a share capital of CFAF 9 million, to play a promotional rolefor industrial projects. SEDI, which has been managed by a French industrialeconomist seconded by a French public onsulting firm, has brought to maturitya handful of industrial projects and played a useful role in assisting BIDIfor its market analysis of several projects submitted to the company, or inhelping some clients in difficulties. SEDI had used up all its capital re-sources at the end of 1974, and was operating at a loss. Thus, the decisionto close the company was taken in early 1975, after BIDI had unsuccessfullytried to convince its partners to provide new capital resources. Ilowever,BIDI's promotional activity will not stop. BIDI has recently created inassociation with Berenschoot-Borboum (a Dutch consulting firm) and BIAO anew company to basically play the same role as did SEDI formerly. This newoutfit is staffed with the French industrial economist who was previouslywith SEDI and a Dutch economist; they are paid by French and Dutch bilateralassistance. In addition to its share capital (CFAF 15 million), this newcompany will receive from BIDI the 2% rebates on interest left to it byUSAID and CIDA for promotional purposes (see para. 5.03). Also, BIDI hasoffered BNDA and CCI to become partners in this new institution.

Project Work

4.17 Appraisals. BIDI's appraisal work has progressively improved inthe past few years. Nevertheless, it needs further upgrading; so far BIDI'sclients have been mostly companies submitting well-detailed applications, sothat BIDI's appraisals consisted of a sensible description of the clients'project accompanied by financial projections. BIDI's technical assessment ofprojects is well done: the German engineer (BIDI is looking for an Ivoriancounterpart) re-evaluates the cost of the project and assesses the technicalsuitability of the investments, with occasional assistance from technical

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departments of BIDI's shareholders, or from specialized consulting firms.The market analysis is sketchy and assumptions need to be better examined;the economic evaluation is almost inexistent. These weaknesses in projectappraisal have not resulted in poor project selection by BIDI from a finan-cial perspective as demonstrated by the low level of arrears (see para 5.01).However, BIDI's management is aware of the need to upgrade work and hasrecently created a new department "Research and Studies" for that purpose.BLDI will eszimate the economic rate of return for import substituting projectssuDmitted unIder the proposed Bank loan and provide internal rate of returnanalyses fo. others. This has been agreed. To develop the economic capabil-ities of BIDI's staff, it is also planned to hold in Abidjan a two-week seminaron techniques of economic evaluation of projects, which would be attended byproject analysts in Ministry of Planning and CCI, in addition to BIDI's staff.BIDI also plans to nominate project analysts for EDI's industrial and develop-

ment banking courses in the future.

4.18 Follow-Up. BIDI's supervision is satisfactory; schedules forperiodic visits to projects under implementation or in operations are pre-pared every year, and financial statments of enterprises financed are re-viewed automatically. This system permitted BIDI, in some cases, to detectin due course its clients' difficulties and to assist in solving them. Ithas also provided good feedback information for project appraisals. Eachyear, BIDI also prepares for internal purposes a detailed study on the sit-uation of all the enterprises it has financed.

Other Procedures

4.19 Planning and Control. An internal financial control system wasestablished in 1970; it is staffed by two persons including a German recruit-ed and paid by German aid. This unit controls BIDI's administrative expensesand the execution of the budget, checks all documents related to loan disburse-ments, and reports on any discrepancies. However, financial planning is weak.Planning of disbursements is made on the basis of disbursement schedules pre-pared by BIDI's clients and agreed upon at the time of loan signing; however,these schedules have not been accurate in many cases and hence BIDI's projec-tions are difficult to prepare. Due to poor cash flow planning, BIDI wasobliged in FY 74 to borrow hurriedly CFAF 1.5 billion from commercial banks,at 1.5% above the Paris Interbank rate. This loan, whose cost has averaged14% in 1974 and was used up to CFAF 1.25 billion, has affected BIDI's pro-fitability in FY74. Assurances have been obtained that BIDI's financialplanning will be upgraded. BIDI will send to the Bank quarterly reports onits activity and financial situation, including a statement of resourcesavailable for new commitments and disbursements. Also, each time a loan ispresented to the Executive Committee, its source of financing is specified.

4.20 Accounting and Auditors. BIDI's accounts are audited by PriceWaterhouse, but the audit does not cover all points normally required by DFCsby the Bank. Price Waterhouse does not evaluate BIDI's portfolio and doesnot prepare the re5Lated exhibits. BIDI's management has arranged to have afull audit of its FY74 accounts, and to follow Bank requirements in the future.

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4.21 Disbursement. Disbursements are controlled through remittance of

invoices or experts' certificates and in many cases are made directly to

suppliers or contractors after visit of the site. Borrowers are requestedto prove that they have self-financed their part of the investment costbefore disbursements on loans are processed. For medium-term discountableloans when BIDI joins other commercial banks, it only controls, along thesame lines, the disbursements when it is acting as leader. This disbursementsystem works satisfactorily.

4.22 Procurement. In many cases, BIDI learns of projects after clientshave already decided upon the equipment to be purchased, and until now,procurement has generally not been a major concern for the institution.In some cases, BIDI has sought advice on whether quotations received byproject sponsors were reasonable, or advised its clients on constructioncontracts. BIDI has expressed its willingness to develop this aspect ofits appraisal process, in particular though better assessement of thereasonableness of equipment costs, and henceforth appraisals will contain adescription of, and judgment on, procurement aspects of the project.

V. BIDI: FINANCIAL CONDITION

Portfolio Evaluation

5.01 As of September 30, 1974, BIDI's portfolio of CFAF 9.2 billion

consists of 17 equity investments and 122 loans (of which 53 medium-termdiscountable loans). Seven loans with CFAF 19 million outstanding, i.e. 2.2%of the loan portfolio had arrears of principal or interest over 3 months(see Annex 8). The largest loan in arrears, accounting for nearly two-thirdsof the total, related to a brick-making company which ran into marketingdifficulties in the past years, but whose situation has improved recently.The loan is guaranteed by the Government. Other loans in arrears also con-cern companies which suffered from marketing problems: two loans outstand-ing for CFAF 11 million concern companies in liquidation; BIDI has solidguarantees on these two loans, and will be nearly totally reimbursed.

5.02 BIDI's provision for losses on loans and equity investments at endof FY74 amounts to CFAF 153 million and seems adequate. It is calculated onthe basis of the possible near-term losses on loans to, and equity investmentsin companies which are in serious trouble, after estimate of the possible

recovery from executing the guarantees and an additional provision for un-foreseeable losses. The auditors will specifically comment on the provisionin the report which will be made available to the Bank. In the projectedincome statements, provisions have been calculated so as to stay at 2% ofthe outstanding portfolio, a probably still conservative proportion.

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5.03 Many of BIDI's long-term clients have not yet started repayingtheir loans, since usually these loans mature after repayment of the medium-term loans they are associated with; in addition, at end of FY74, about40 clients were still implementing their programs. The required full auditwill provide more detailed judgments on the quality of the portfolio and theadequacy of the provision. However, given BIDI's good follow-up and super-visioni work, good arrears performance and ample security and guarantees, nomajor change in the provisions is expected.

5.04 BIDI's equity investments are listed in Annex 9. Apart from FY72and 73, where the return on these investments had averaged 32% and 20% dueto distribution by a textile company of extraordinary dividends, the returnon BIDI's equity portfolio has been negligible. One participation in a foodprocessing company is totally provisioned, since the enterprise is bankrupt.

The other participations mainly concern enterprises which have startedoperations recently or are still implementing investment programs.

Resources

5.05 BIDI has been successful in attracting external resources fromvarious sources, in addition to its local resources from BCEAO and CAA (seeAnnex 10). Most foreign resources have been provided at concessionary terms.The Government has so far taken the foreign exchange risk on all of BIDI'sforeign currency borrowings. Foreign resources have come from KfW (fourloans totalling DM 30 million, 20-30 years, 2-4% interest), AID (two loanstotalling US$7.5 million, 30 years, 3.5 and 4% 1/ interest), CIDA (Canadian$6 million, 50 years, 4% 2/ interest), CCCE (FF 1.2 million, 15 years, 5%interest),and recently DEG (two loans for DM 10 million, 15 years, 8.5%interest). Many of these loans have restrictions on their use; in particularthe loans from CIDA and USAID are tied to Canadian and US procurement. Theaverage cost of resources has been low in the past, it increased to 4.1% inFY73 following the increase by 2 points of BCEAO's discount rate, and to 5.3%in FY74; BIDI's spread on borrowed funds has averaged 3.5% during the pastthree years.

Financial Results

5.06 BIDI's income statements for FY71-FY74 and the first ten monthsof FY75, are summarized in Annex 11. Past and projected financial ratiosappear in Annex 12. Net profits increased from CFAF 134 million in FY71 toCFAF 258 million in FY 73, i.e. a return of about 22% on average equity.Profits in FY74 decreased to CFAF 164 million, as a result of (1) slower

I/ Of which 2% are left at BIDI's disposal to establish a fund to promoteIvorian enterprises and a guarantee fund.

2/ To be left at BIDI's disposal to constitute a fund to promote Ivorianenterprises.

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disbursements than expected; (ii) the increased cost of debt; and (iii) thesudden decrease in dividends received. Most of the profits have been allocatedto a tax-free general provision for risks, and as a result, taxation averaged10% of profits in the recent years, and the distributable profit has remainedlow, being calculated so as to raise dividends from 5% in FY69 to 7% in FY73.Despite the decrease in gross profit in FY74, the 7% dividend could bemaintained on a share capital increased by 50% following a stock dividenddistribution in FY74. Administrative expenses have averaged 1.8% of totalassets in the past three years.

Financial Position

5.07 BIDI's balance sheets for FY71-FY74 and the provisional balancesheet as of July 31, 1975, are summarized in Annex 13. Its situation atend of FY74 was sound with equity totalling about CFAF 1.4 billion, a Govern-ment subordinated loan of CFAF 1.25 billion (0% interest maturing 1980-1995),and borrowings amounting to CFAF 7 billion. The ratio of BIDI's medium andlong-term debt to equity plus the Government loan amounted to 3.2:1 at endof FY74. With repayments on the Government loan due before 1993 (expectedlast maturity of the projected Bank loan) considered as debt, and repaymentsafter 1990 considered as equity, the ratio was 4.4:1..

VI. PROSPECTS

BIDI's Medium-term Goals and Operational Forecasts

6.01 Until now, BIDI has operated as an efficient, rather conservativeinvestment bank, relying more on its borrowers' experience and good guaranteesthan on its in-depth appraisal of projects or on its own promotional efforts.As a young institution, this strategy made sense and has allowed BIDI to dev-elop its staff and a sound financial base. BIDI now aims at playing a moredevelopmental role, as demonstrated by the creation in 1972 of SEDI and therecent establishment of a Department of Research and Studies. It also intendsto further increase its share of financing directed towards Ivotian enterprises,and projects that operations in their favor will increase at a 20% annual ratein the coming years, as compared to the forecast overall growth rate of 10%annually for total operations. Financially, BIDI's objective is to continuebeing a key source for long-term funds to industry and, consequently, tosteadily develop its portfolio of long-term loans to about CFAF 15 billionin the next five years. BIDI also forecast to increase progressively itsdividends to a level (about 10%) that would permit it to raise fresh localcapital in order to increase Ivorian participation in its share capital.

6.02 Given development prospects of the Ivorian economy and in particularof the manufacturing sector (see Para. 2.16), BIDI's business outlook appearspromising. At the end of FY75, its pipeline of projects amounted to CFAF 4.9billion for about thirty projects. BIDI's approvals in FY 75 (CPAF 4.4 billion)

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included about CFAF 0.85 billion for two specific projects financed under theCIDA line of credit (CFAF 1.32 billion). Normal operations have been projectedto increase by about 10% annually from FY75 on, in line with the projectedannual growth of value added in manufacturing. During FY76, BIDI also plansto commit for specific projects the remaining portion (about CFAF 0.47 billiQn)of the CIDA line of credit. As a result, BIDI's total operation for FY76is projected to stay at about the level of FY75 (CFAF 4.4 billion). Financialprojections are given in Annexes 14 to 17.

6.03 Long-term non-discountable loans (i.e. with an average term of 10years) are projected to represented about two thirds of total lending oper-ations; discountable medium-term loan would represent about 20%, as againstan average 17.5% in the past; the remainder would consist of medium-termnon-discountable loans (average term of four years). Equity investmentshave been projected at CFAF 100 million/year.

Resource Requirements

6.04 At the beginning of FY76, BIDI had CFAF 2 billion available for newcommitments. Commitments until the end of 1977 (proposed limit date forsubmission to the Bank of subprojects) are projected to amount to aboutCFAF13.1 billion, including CFAF 2.6 billion in medium-term loans to bediscounted at BCEAO. Co,pmitments on non-discountable operations are thusprojected to amount to C$AF 10.5 billion over the period, to be partly fi-nanced as follows:

CFAF- Resources available at beginning

of FY75 2 billion- Repayments to BIDI on

non-dipcountable loans: CFAF 4.6 bil.Less: repayment by BIDI on itsborrowings (excluding BCEAO) 2.9 bil.

CFAF 1.7 billion

- BIDI's projected internal cashgeneration from profits andprovisions 1.1 billion

CFAF 4.8 billion

Thus the remaining resource gap for new commitments amountsto about CFAF 5.7 billion, which would be covered as follows:

CFAF- Proposed Bank loan of $8 million 1.6 billion (28%)- Loans from DEG and CAA (obtained) 1.1 " (12%)- Loans from CCCE, DEG, possibly ADB 3.0 " (60%)

CFAF 5.7 billion

- 21 -

CCCE has indicated its willingness to provide about CFAF 0.7 billion/yearto BIDI (i.e. about CFAF 1.7 billion over the period). DEG has alreadymade two loans of DM 5 million (CFAF 0.45 billion) each to the institution,and has also expressed its willingness to continue lending to BIDI. TheADB is presently considering a loan of about 2 million units of accounts(about CFAF 0.5 billion). Since BIDI's long-term loans are usually mixedwith discountable funds, the foreign component of a project is normallygreater than the amount of the long-term loan granted by BIDI, and thusthe proposed Bank loan would be used only to finance expenditures outsidethe Ivory Coast (i.e. the CIF cost of imported goods, the foreign cost ofservices, and the foreign component of civil works).

Forecast Financial Results

6.05 Given the high cost of debt incurred in 1974, and the increaseby 25% of personnel charges recently approved by BIDI's Board, BIDI's profit-ability in FY75 will remain low as compared by FY72 and FY73. Net profitsis forecast to represent 12% of average equity (12.5% in FY74) as againstan average 22% in FY72 and 73. However, returns on average equity of about20% should again be attained from FY77 on, as a consequence of the expectedhigher spread resulting from the more rapid increase of the average incomefrom loans than of the average cost of resources. Dividends have been pro-jected to be progressively raised to 10% considered as the minimum necessaryto attract Ivorian investors with a view to a share capital increase.

6.06 BIDI's portfolio would increase to CFAF 21.7 billion at the endof FY79. Equity is projected to increase to nearly CFAF 3 billion, whereasborrowings (including the Government loan of CFAF 1.25 billion) would reachCFAF 18.5 billion. By that time (end of FY79), the debt to equity ratio 1/would have decreased to 4.9:1 after having peaked at 6.1:1 in FY76. BIDI'sdebt service coverage both for interest and interest plus principal shouldbe over 2:1 throughout the life of the proposed Bank loan. Given BIDI'sexperience, its good portfolio and rather strong cash flow, this degree ofleverage is acceptable and a 6:1 ratio has been agreed with the repaymentson the Government loan maturing after the proposed Bank loan is totallyreimbursed being considered as equity.

VII. CONCLUSIONS AND RECOMMIENDATIONS

7.01 BIDI is a well-established and profitable institution. During thefirst decade of its existence, it has progressively expanded its operationsand its disbursements now represent about 10% of industrial investment inthe Ivory Coast. The share of BIDI's operations going to Ivorian-ownedenterprises has progressively increased from an average of about 10% in FY70to 36% in FY74.

1/ With Government Loan repayments before 1993 considered as debt.

- 22 -

7.02 BIDI's management is a good one, respected by the Government andthe business community. The areas where BIDI can improve are in evaluatingthe economic impact of projects, better financial planning and promotionalactivity.

7.03 Prospects for BIDI are good. A Bank loan of $8 million would coverabout 30% of its resource requirements through the end of 1977; with thisfirst loan to BDI, the Bank's objectives would be: (i) to fill a gap inthe import financing requirements of a competent intermediary for productiveinvesrnent in the Ivory Coast; (ii) to strengthen BIDI's internal proceduresin the area of financial planning and control and the economic aspects ofproject appraisal; and (iii) to assist the institution's efforts towards amore developmental role in promoting sound investments. Apart from thisinstitution building effect, the funds made available will, on the basis ofpast experience, allow BIDI to be associated with total investments of aboutCFAF 15 billion, which are estimated to create jobs for over 5,000 persons.

7.04 During negotiations, agreement was reached and assurances wereobtained on the following main points:

(a) BIDI's lending rate for long-term loans would be at least11% per annum, resulting in a minimum cost of capital for thesubborrower of 13% (para 3.12);

(b) the foreign exchange risk for the proceeds of the proposedBank loan would be borne by the sub-borrowers (para 3.11);

(c) use of the proceeds of the Bank loan to finance the C.I.F. cost(i.e. the price at Ivory Coast's border) of imported goods, theforeign cost of services, and the foreign component of civilworks (estimated at 35% of total cost) (para 6.04);

(d) BIDI would take steps to improve its financial planning(para 4.19) and its economic appraisal of subprojects (para 4.17);

(e) prior approval by the Bank of subprojects amounting to more thanUS$200,000, with an aggregate free limit of US $2 million.

7.05 The project is suitable for a Bank loan of US$8 million equivalent,with a flexible amortization schedule conforming substantially to the aggregateamortization schedule of the subprojects, none of which should exceed 15 years.

IVORY COAST

Origin of G.D.P. at Current Prices-(FAF billion)

Industry 1965 1968 1969 1970 1971 1972 1973

Mining 1.7 1.0 1.1 0.9 1.3 1.5 1.8Cereals and flour 2.6 3.9 3-5 4.2 4.6 5.5 6.8Canning and food preservation 1.5 2.4 2.5 3.8 4.5 6.o 4.9Beverages, ice 0.8 1.3 1.6 2.3 2.7 3.0 3.4Oils and fats 0.9 1.1 1.1 2.2 2.4 2.3 3.6Other food industries 1.7 2.1 2.1 2.8 3.6 3.9 4.4Textile and clothing 4.3 7.0 7.6 8.8 9.7 11.6 11.0Leather, footwear 0.4 0.9 0.9 1.0 1.0 1.0 1.2Forest industry 3.8 3.6 3.7 4.2 3.8 4.3 6.1Petroleum products 1.1 8.6 10.3 10.9 11.7 14.6 15.5Chemical products, plasticsand fertilizer 1.2 2.1 2.4 3.0 3.3 3.7 3.7

Rubber products 0.04 0.2 0.4 0.5 0.9 0.4 065Construction material 0.2 1 1.5 1.5 1.5 1.5Material industry 0.1 0.2 0.3 0.5 0.6 0.5 0.5Construction and repairtransport material 2.7 3.6 4.3 5.0 6.1 6.6 8.1

Other mechanical andelectrical industries 1.2 1.6 2.1 2.6 3.2 4.0 4.5

Other industrial products 1.3 1.8 1.9 2.3 2.7 2.9 3.2Electrical energy 2.1 3.4 4.1 14.6 4.8 5.7 6.3

Total Industry 27.8 45.3 51.1 61.1 68.o 79.0 87.0

Primary sector 84.9 101.1 108.2 112.6 117.6 125.1 159.2Construction 12.8 16.8 17.7 27.9 33.4 32.5 34.5Transport 21.0 26.5 30.8 31.9 37.6 42.2 53.lServices 46.8 83.7 99.5 112.3 108.8 114.3 136.6Administration, Import duties 43.5 51.1 56.7 68.2 73.8 78.5 93.6

Total G.D.P. 236.8 324.5 364.0 414.0 439.2 471.6 564.0

Source: Ministry of planning

DFCDJanuary 15, 1975

IVORY COAST

Development in Priority Enterprises

( CFAF billion )(Actual)

1967 1968 1969 1970 1971

Share Capital 15.2 16.3 17.8 17.9 22.0Government participations 2.1 2.1 2.6 3.2 3.3Total Gross Investment 24.8 27.7 31.9 38.9 47.3Gross Annual Investment 3.3 2.9 4.2 7.0 8.4

Turnover 29.8 36.5 43.7 51.3 67.7Exports 10.5 13.5 16.3 17.7 20e2Profits 1.4 1.6 2.7 2.8 2e6Taxes paid (direct & indirect) 1.7 2.4 3.1 4.0 5.3Value added 9.2 11.8 14.9 16.6 21.1

Employment Year EndIvorians 4,791 6,731 8,231 9,127 11,990In supervisory functions (119) (164) (217' (300) (376)Other Africans 6,696 6,616 6,938 7,824 8,444Other Expatriates 581 633 667 657 728

Salaries paid to Ivorians &Other Africans 1.8 2.3 2.8 3.4 4.8

Salaries paid to other Expatriates 1.3 1.6 1.7 1.8 2.3

Number of enterprises 53 55 60 63 69

Source: Ministry of Planning

DCDDAugust 6, 1975 N

IVORY COAST

Summarized Balance Sheets of the Four Commercial Banks

All Commercial Banks Shares of Individual Banks as of 9-30-74

( CFkF billion ) % ( CFAF billion ) ( )30.9.71 22.9.72 1.10.73 30.9 74 30.9.74

ASSETS BIAO BICI SIB SGB BIAO BICI SIB SGB

Short-tern credits 43.7 51.2 63.0 70.8 49 13.1 15.4 15.9 26.4 19 22 22 37Bills 17.2 20.4 20.9 30.8 21 7 4 6.6 5.B 11.0 24 21 19 36Medium-term credits 3.3 5.2 7.4 10.9 8 1.9 4.2 1.1 3.7 17 3 10 3Cash & Bank accounts 3.9 4.0 5.2 8.3 *1.3 1.0 °. 4.5 16 12 18 54Other assets 5.6 9.6 16.2 24.5 17 9.4 7.3 4.0 3.8 38 30 16 16Total Assets/L,iabilities 73.7 ~(. 112.7 T1277Y 100 73. W -T .7 7F7 797T 273 -2 179_3

LIABILITIES

Current accounts 20.3 24.7 27.2 35.5 24 6.8 8.3 8.1 12.3 19 23 23 35Checks accounts 18.0 18.8 21.6 24.5 17 3.5 5.4 4.0 11.6 14 22 16 L48Accounts payable

after clearance 9.1 9.9 11.8 17.7 12 5.3 3.2 2.2 7.0 30 18 12 40Bank deposits 7.2 8.0 10.6 11.0 8 3.9 2.3 2.5 2.3 35 21 23 21Other deposits 13.9 22.1 32.0 45.1 31 11.2 13.0 9.3 11.6 25 29 21 25Capital, reserves, profits 5.2 6.9 935 11.5 8 2.4 2.3 2.2 4.6 21 20 19 40

73.7 90.4~ 112.7 5_.3 500 3T71 34.5 2F.-3 49.4W 73T 77 10 3OTHER ITEMS

Liabilities by guarantees 13.1 15.0 20.3 26.0 2.5 7.5 6.3 9.7 10 29 24 37Bills in circulation 15.6 23.5 28.6 46.9 14.1 11.8 7.8 13.2 30 25 17 28Confirmed credit pending 3.0 4.8 9.1 8.6 3.7 2.3 0.8 1.8 43 27 1 29

Source: BCEAO

DFCDAugust 6, 1975

Lt

ANNEL

BANQUJE IVOIRIENNE DE IEVELOPPEMENT INDUSTRIEL

Board of Directors

(as of April 30, 1975)

Members Alternate

Class A

J.B. AMETHIER, Director of External Finance E. EBAGNITCHIEMinistry of Finance, Governor of BIDI

Societe Nationale de Financement (SONAFI) J.B. AMETHIERE. EBAGNITCHIE (representing the Parliament) C. KONAN (General

Manager of SONAFI)Caisse Centrale de Coop6ration Economique M. PENANT D'HYZARN

(CCCE) (Director of CCCEin Abidjan)

Banque Centrale des Etats de l'Afrique del'Ouest (BCEAO) L. DIABATE

H. WYSS - I.F.C.

Class B

A. DIBY, General Manager, BIDI D. BAMBAChase Manhattan Overseas Banking'Co. H. de CARMOYR. MALAN (Lazard Bros.) E. BLACK (Lazard Bros.)BIAO M. DOUNBIASTE. A. BLOHORN M. KELLER (SCOA)R. HOEN (Chase Manhattan Bank) NYMAN (Skandinaviska

Ens. Banken)Deutsche Entwicklungsgesellschaft Berliner Frankfurter Bank

Exe¢utive Committee

J.B. AMETHIER C. KONANA. DIBY D. BAMBAH. DE CARMOY BIAOR. MALAN A. DOUMBIACCCE M. PENANT D'YZARN

Observers

H. WYSS I.F.C.M. KOFFI N' GUESSAN, General Secretary, Guarantee Fund

IFCDAugust 6, 1975

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

ORGANIZATION CHART(AS OF APRIL 1975)

Board of Directors

Executive Committe

| GeneralMage L

(Mr.Diy

Mr. Soumahoro Sekou l Mr. Tiemoko Konan l and Studies Mr. Moussa Kone[ J Mr. Ndri .

Deputy Director Deputy Director Investment Deputy Director Finance Deputy Director lDeputy DiectoLegal Department Mr. Somali Mr. Paul Kra of Research of Administration

Mr. Kilimo]

Legal Affairs Documentation uie en| Service | | Credit Sere | Technia Servicx | Accounting Service| Information Service| Service e M ng Mae ervc Personnel

Professionals 18

Non-Professionals 19

Total 37

DFCDAugust 6, 1975 World Bank - 15267

ANNEX 6Page 1

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

Statement of Objectives and Management Policy(As amended on February 26, 1973)

The Bank, an Institution of the Ivory Coast that enjoys benefitsgranted by the Republic of the Ivory Coast, is assisted by French publicbodies and the International Finance Corporation and is also supported byan international group composed of private financing institutions, localbanks and private individuals. All these have assumed the risk of a capitalparticipation in the Bank.

The Bank shall therefore take account of these interests in thepursuit of its over-all objective, which is that of encouraging the develop-ment of private economy and of attracting capital investment to the IvoryCoast.

The basic obligations of the Bank are specified in the Agreement ofEstablishment concluded with the Republic of the Ivory Coast. These obliga-tions are as follows:

(a) To encourage the development of private industrial enterprisesin the Ivory Coast and to promote the participation of foreignand domestic capital in the industrial development of thecountry.

(b) To spare no effort in studying the financing of new industrialenterprises and to stimulate foreign investment in the IvoryCoast under the most favorable conditions possible for theexecution of projects approved by the Government.

(c) To provide professional and technical training for IvoryCoast nationals, so that they may be employed in the Bankat all levels, up to the limit only of their competence, andin particular to train them in disciplines necessary to the.general and financial management of the enterprise.

It is stated in the Statutes that the Bank has the right to:

(a) Subscribed, purchase and otherwise acquire, hold, sell and placein waatever manner, capital shares of any kind and also IvoryCoast securities of any nature, and exercise all rights pertain-ing tnereto;

(b) Make all types of loans at medium-terms (1 to 5 years) and atlong-cerm, with or without guarantee in the Republic of theIvory Coast;

ANNEX 6Page 2

(c) To give its guarantee and surety;

(d) Participate in the placing, issuance and distribution of sharesand other securities of every kind;

(e) Assign to third parties the rights deriving from any loans orinvestments in securities made by the Company and invest orreinvest the proceeds in accordance with the provisions ofArticle 2 of the Statutes;

(f) In general, engage in all operations, transactions or enter-prises of any nature, whether financial, industrial or commer-cial and whether in movable or immovable property that aredirectly or indirectly related to the above-mentioned objectsor that could by their nature facilitate, promote or developits business.

The Statutes of the Bank prohibit it from engaging in certainoperations of a purely banking nature. In particular, the Bank shall notaccept deposits of any kind of drafts or bills of exchange.

The Bank shall seek to obtain a profit and to carry out its activi-ties in accordance with a prudent and orthodox financial policy, takingaccount of its responsibilities and of its directive role in the community,and also of the present state of the financial market in the Ivory Coast.In general, its activities shall be based on the following principles:

1. Nature of the Projects to be Financed. The Bank shall grantits assistance to private industrial enterprises of the IvoryCoast, as defined in its Statues, including mining and forestryconcerns and the exploitation of marine resources.

2. Feasibility and Profitability of the Projects. The Bank shallbe the sole judge of the feasibility and profitability of theprojects in which it invests, and of the competence of thepersons in charge of them.

3. Conditions of Management of the Enterprises. The persons incharge of managing the projects or taking the initiativetherein shall be experienced and shall have a financialinterest in the success of the enterprise. In general, theBank shall refrain from financing projects proposed by suppliersof equipment or by advisers who would not later be responsiblefor management. When a supplier is in charge of the managementof a project, he shall have a greater interest in the operationthan that which he can reasonably expect to obtain from thesale of equipment or services.

4. Nationality. Financing arrangement for the projects will bemade regardless of the nationality of the promoters. However,

ANNEX 6Page 3

special attention will be paid to projects proposed by IvoryCoast promoters.

5. Private Enterprises. The Bank shall finance only enterprisesthat are controlled and directed by private interests. Stateparticipation in an enterprise shall not necessarily preventthe Bank from financing it, provided that its interests,measured according to voting rights or to share in the controlof the management of the enterprise is not predominant, andespecially when the state investment is only provisional untilthe enterprise is transferred to private interests. Thoseenterprises which comply with the following three criteriashall be deemed to be private enterprises regardless of thepercentage of their capital held by the Government Sector:

- purpose of the company: production of goods orservices with a view to make profits and to distri-bute earnings.

- management entrusted to the Private Sector.

production sold on a free and competitive market.

6. Size of the Projects. In order to be able to make its assist-ance available to small private Ivorian entrepreneurs, the Bankdoes not fix any inferior limit for projects which are present-ed to it.

7. Extent of Commitments. The maximum commitment that the Bankmay assume (loans plus capital subscription) shall not exceed15% of its net worth (including the advance granted to it bythe Government). Those projects for which it appears desirableto exceed this limit will be studied by the Executive Committeeon their merits, and decisions will be made on a case-to-casebasis.

8. Capital Investments. In addition to granting loans, the Bankmay also subscribe shares or securities of private industrialenterprises of the Ivory Coast, when the provisions madefor appreciation or dividends are considered satisfactory.The Bank shall not make capital investments of which thecumulative value would exceed, in purchase value, the amountof its capital (after deduction of any losses) and of itsnon-ear-imarked reserves.

9. Control of the Enterprises. The Bank shall not hold themajority interest in any enterprise or any other interest thatwould essentially give it responsibility for the managementof the enterprise; it shall not, save in exceptional cases

ANNEX 6Page 4

or in the event of present or imminent danger, assume res-ponsibility for management of the enterprises in which it hasinvested; it shall not hold more than a 30% participation inthe capital of an enterprise, but it may however undertaketo place shares beyond that percentage, if, at the time ofgiving such an undertaking, it considers that it will not infact be called upon to take more than 30% of the capital ofthe enterprise.

10. Distribution of the Investments. The Bank shall distributeits financing among enterprises of different categories.

11. Liquidity. The Bank wishes to place on record the fact thatit will not be in a position to liquidate its participationsand to renew its portfolio for a certain length of time, andthat when making an investment it may not at the time be ableto forsee how it will withdraw its investment; nevertheless,it shall not consider itself a permanent lender but shallorganize its financing bearing in mind a possible assignmentof its participations to institutions and to private individuals,whether in the Ivory Coast or elsewhere.

12. Reserves. The Bank shall create and maintain adequate reserves.

13. Financial Statements. Reports on Activities. The Bank shallrequire its borrowers to furnish provisional financial state-ments at least once a quarter, and annual financial statementsdrawn up by independent experts. It shall also receive reportson activities from its borrowers, which shall be sent to itwithout delay and at reasonable intervals. The borrowers shallbe asked to accept the restrictions governing the use of Bankfunds from external sources and to help the Bank to fulfill itsobligations in this regard.

14. ManagEment and Staff of the Bank. The Bank shall install themanagerial staff and obtain the personnel necessary to a well-balanced organization that includes financial and economicanalysis, technical, accounting and legal services and thesupervision of investments that have already been made. TheBank shall train Ivory Coast staff so that they will be capableof assuming senior positions when these are vacated by theforeign staff.

Rates of pay and promotion shall always be conditional uponmerit and ability and not nationality.

ANNEX 6Page 5

15. Cooperation with Existing Organizations. The Bank shallcooperate with the organizations and services already inexistence in the Ivory Coast.

16. Development of the Capital Market. The Bank shall make along-term contribution to the development of the capitalmarket in the Ivory Coast. In particular the Bank shall not,except in special circumstances, depart from the followingfinancial principles:

(a) Guarantees in favor of the Bank. The Bank expectsto receive sufficient pledges for the loans that itgrants, which pledges shall be of first grade incases where the Bank is the lender granting thelongest terms or providing for the major portion ofthe loans. In addition to these pledges, the Bankshall take account of the profit-making ability de-monstrated by the promoters and managers of the project.

(b) Applications for Assistance. The Bank shall not grantloans to be used purely for the repayment of debts tothird parties. Generally speaking it shall not makeloans for the purpose of setting up working capital and,in any case, the loans granted for this purpose shallnever exceed the amount of the working capital fundsthat may be considered as a minimum.

(c) Rate of Interegt. It is expected that the Bank willcharge suitable rates, having due regard to the capitalmarket in the Ivory Coast, wlhich will enable it, withoutdiscouraging investment in the country, to obtain areasonable return on its capital, to set up adequatereserves and to distribute reasonable dividends to itsshareholders, on the basis of a sound financial policy.

In addition, it is understood that the Bank may seek to parti-cipate in the benefits, especially by obtaining the possibilityof converting part of its long-term loans in an equity participa-tion.

(d) Other Forms of Investment and Supplementary Remuneration.The Bank may make loans recorded by credit instrumentsof all kinds, such as commercial paper, convertiblebonds or other similar securities. When the Bank financesa project it may also receive supplementary remunerationby way of the remittance of shares or of other types ofparticipations.

(e) Comnitment Charge. A commitment charge shall be required.

ANNEX 6Page 6

(f) Exchange Risks. The Bank shall not assume the exchangerisk on a loan made in foreign exchange that it hasitself borrowed.

(g) Investment Agreements. The disbursement of resourcesby the Bank shall be the subject of written agreementsbetween the Bank and the borrowers. Borrowers shallrepay to the Bank all reasonable consultation fees thatit has incurred, and all expenses arising out of theoperation.

(h) Guarantees Granted by the Bank. The Bank shall onlygrant a guarantee when the project concerned could havebenefited from a direct loan.

(i) Other Forms of Assistance. The Bank shall strive toassist the project promoters to prepare and submit theirinvestment proposals although it is recognized thatthe Bank, in particular at the initiation of its opera-tions, will not have available the necessary staff togive technical advice and prove assistance on a large-scale.

ANNEX 7Page 1

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

Loan Statistics(in CFAF million)

(a) Approvals (net of reductions)(of which) Equity No. of

Fiscal Year Long-term Medium-term rQdiscountable investments TOTAL Operations

1965(10 months) 280 317 171 - 691 101966(9 months) 459 80 80 10 459 71966/67 390 96 90 71 553 31967/68 495 527 96 - 1,029 271968/69 1,548 647 170 44 2,239 331969/70 710 627 231 1 1,338 311970/71 750 1,044 438 132 1,926 251971/72 1,597 587 587 153 2,337 211972/73 2,210 514 347 209 2,933 241973/74 11536 1493 $70 _ 6 334 451974/75 2,672 1 556. 890 140 4 368 30

12,647 7,4bb 3,6715 - 766 20,0 6(b) Breakdown of Operations (Approvals) according to size 1/

Total Over 100 51-100 21-50 20 or lessNo. Amount No. Amount No. Amount No. Amount No. Amount

Long-term loans 97 12,647 48 9,707 22 1,962 20 868 7 110Medium-term loans 212 7,488 10 1,935 28 1,951 60 2,201 114 1,401Equity investments 31 766 1 150 4 305 5 185 21 126

Total: 3v0 20,901 9 11,792 I 4,218 F 3,254 IJ 1,637

% of Total 100 100 17 56 16 20 25 16 42 8

(c) Breakdown of Operations (Approvals) according to Sector of Activity

No. of enterprises financed Amount % of total

Textiles 16 3,003 14.4Food, beverages processing of fruit 43 2,698 12.4Tourism-Hotel 21 2a,575 12.3Timber and furniture 10 1,603 7.7Metal industry 20 1 ,544 7.4Fats and oil 22 1,518 7.3Fishing 6 1,297 6.2Transport,distribution 9 1,147 5.5Construction, building materials 5 1,019 4.9Services 12 883 4.2Plastics 13 582 2.8Electrical industry 12 695 3.3Large-scale agriculture 3 241 1.1Ot,hers 32 2 096 10.0

Total: 224 100.0

1/ Combined loans and equity investments for the same project, which are counted as oneoperation in Table (a) have been broken down into separate operations in Table (b).

DFCDAugust 6, 1975

AIMS X 7Page 2

BANQUE IVOIRIENNE DE DEIVELOPPIEEIT IINDUSTIJUEL

Loan Statistics(in CFAF million)

(d) Geographical Breakdown of Operations (Approvals)

No. of enterprises financed Amount % of total

Abidjan 170 15,611 74.7Bouake 8 776 3.7Other locations 46 4,514 21.6

Total 224 20,901 100.0

(e) Breakdown of Cperations (Approvals) according to Purpose

No. of enterprises financed Amount , of total

New projects 117 11,908 57.0Extensions 107 8,993 43.°

Total 224 20,901 100.0

(f) Breakdown of Operations (Approvals) according to Ownership of Borrowers

Capital Structure of No. of enterprises financed Amount % of totalBorrowers

Ivorian majority 75 6,403 35.5Foreign majority 149 13,b98 64.5

Total 224 20,901 100.0

DFCDAugust 6, 1975

B-ANQUE IVOIRIEMIE DE DEVELOPPFEI4RT INDUSTRIEL

Problen Proj ects

(as of september 974) -

Year Outstanding

Company ity Approval IDObservations Gu- G.:rtees

Forges et Ivorian - Insufficiert inarkueU._

Boulonnerie Mecnanlcs ±969 9e00 Some slight irimprovemenrt - hircm ,api-Lal

d' Abidjan increase in process. i4rrtr:., rn personalguaranteeas

A-^}'A Repair 1969 5e40 Ivorian-1Narketing probleris - !'c,rtgage,

Shop Guarantee Fund and Persona:. i!-iranteeImproving.

ChaussonAfrique Batteries 1970 24h50 Technical difficulties now solved -

Guarantee from mother company (France).

MIB Brushes 1970 14.40 Ismaelian -Market Problems: ImprovingMortgage and personal guarantees

FINUMk Foodprocessing 1967 6.00 Ivorian - Failure due to marx-;%2ng problems

Fully provisiorned.

SIVETI Textile 1971 5.35 Ivorian - Failure due to marketing problems -

MIortgage Guarantee Fund a-ad personal guarantee.Fully provisioned.

Total 64.65

1/ Excluding SOBRICI, (loans outstanding for CFAF 120 million); this brick-making company had su2i d

from technical and marketing difficulties in 1970-73; the conpany is now operating well, &1 :gh

its financial structure is still fragile.

i Plu8 - Equity investment: 8.16 totally provisionedDFCD August 6, 1975

ANNEX 9

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

(Equity Investments)

(As of April 30, 1975)

BIDI's Investment 1973 Net DividendsYear at cost % of Profit as Paid to BIDI

Company Activity Approved (CFAF million) Shares % of share in FY 74 ascapital % of share

capital

SOTEXI Textile 1967 52.5 15.0 6FINUMA Food processing 1965 b.1 23.3 LSIVENG Chemistry 1967 11.0 1.8 1.SOCEF Fishing 1969 2.0 1.1 27COCI Vegetable oil 1969 19.5 10.0 LSAFBAIL Service 1970-74 14.9 16.8 16 3PECI Plastics 1970 6.0 15.0 77 -SERIC Food processing 1971 0.5 0.1 ILes Arcades Real estate 1972 70.0 30.0 L -SICOGERE Services 1972-74 o.6 5.0 37 16SODACAP Plastics 1972 5.0 16.1 49MRP Plastics 1972 40.0 20.0 7UTEXI Textile 1972 150.0 7.5 ISITHCO Hotel 1973 10.0 10.0 ICOTIVO Textile 1973 100.0 7.5 IICODI Textile 1973 30.0 4.o 24SIMEA Transportation 1973 45.5 15.0 448STESCO Services 1973 0,05 n.a.SEP Services 1974-75 0.65 5.0 n.a.C.I. Food 20.0TRIBOIS Wood 50.0SAFERM-C.I. 70.0

706 5 1

L Company operating at a lossI Company implementing an investment program

2I of which 143 not yet disbursed

DFCDAagust 6, 1975

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

External Borrowings (excluding BCEAO)

Date of Rate of Foreign OutstandingInstitution Signature Amount Interest Exchange risk Duration Repayment as of 9-30-74 Observations

(CFAF million)CAA I 1970 CFAF 500m. 5.5 None 5 yrs 1971-75)

)CAA II 1972 CFAF 500m. 6.o None 10 yrs 1972-82)

) 2,025 Mostly used in hotelCAA III 1973 CFAF 500m. 7.5 None 21 mos 1973-75) projects

CAA IV 1974 CFAF lOOm. 8.0 None 10 yrs 1974-84)

CAA V 1975 CFAF llOGm. 600m. XT 8.5% - yrs50Qm. ST 7.5% 1 yr.

KfWT 1 1968 DM lOIn. O4.0 Gvrent 20 yrs 1973-88) For small and medium) size enterprises. Pro-

KfN II 1970 DI 5m. 4.0 Gvment 20 yrs 1976-90) 1,167 curement outside Ivory) Coast

Kf"T, III 1970 DY, 5m. 4.o Gvment 20 yrs 1979-97)Maximum DM 500,000 Pesubproject. For enter-

KfW,, IV 1974 DM4 lOn. 2.0 Gvment 30 yrs 1984-2004 prises owned 30% at leastby Ivorians. Procurementoutside Ivory Coast

DF'G 1 1974 DM 5m. 8.5 Gvmnent 15 yrs 1979-94 Semi-annual reimbursement

D XE 2 1975 D]M %. 8.5 Gvment 15 yrs 1980-95

AID 1965 Wi5 4r. L.0 j Gvment 30 yrs 1973-95 1,248 To promote Ivorianenterprise s. Procurement

AID Entente 1973 $2.5 m. 3.5 Gvment 30 yrs 1978-2003 U.S. or LDC countries

CCCE 197)4 CFAF 6 00n. 6.0 None 15 yrs 195 Max. CFAF 100 m,. persubproj e ct

CIDA 1974 $6 in.. 4*/ Gvment 50 yrs 1984-2024 Canadian procurement

1/ 2 7 to be put aside for a guarantee fund and a fund to promote Ivorian enterprises.5/ To be left at BIDI's disposal to constitute a fund to promote Ivorian enterprises3/ CCCE has alsc accepted in FY-75 to finance, on a case-by-case basis, sub-projects approved by BIDI for a total oDFCD of about (CFAF 700,millioo

August 6, 197T

ANTNE 1 1

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

Summarized Income Statements /(in CFAF million)

FY 71 FY 72 FY 73 FY 74 10-1-74--7- ----- :audited -… unaudited

INCOME

interest and commissionon loans 318 381 448 670 610

Interest on short-terminvestments 20 12 14 12 8

Dividends 3 78 78 1 17

Other 42 21 52 33 30

Total income 383 492 592 716 665

EXPEIS

Administrative expenses 95 102 128 147 159(off which depreciation) (12) (14) (18) (20)

Financial expenses 115 130 181 342 326

Provision for losses 10 26 3 9 -

Total expenses 220 259 312 498 h8W

Earnings before tax 163 233 280 218 180

Tax 29 20 22 54 -

Dividends 35 42 49 74 _

Reserves 99 171 209 90 -

1/ FY: October 1 - September 30

/ Including exceptional expenses stated for BIDI's tenth anniversary: 25

DFCDAugust 6, 1975

ANNEX,' 12BANQUB IVOIRIENIE DE DEVELOPPEMENT INDUSTRIEL

Financial Hatios(FY ending September 30)

Actual ProjectedP172 FY73 FY74 FY75 FY76 FY77 FY7b FY79

Income Statement Elementsas ' of Average Total Assets

Gross income 8.8 9.0 8.6 8.7 9.0 9.3 9.6 9.9Less Financialexpenses 2.4 2.8 4.2 4.1 4.3 4.4 4.7 5.1Administrativeexpenses 1.& 1.9 1.8 1.7 1.6 1.5 1.5 1.5

Gross profit 4.6 4.3 2.6 2.9 3.1 3.4 3.4 3.3Less Provisions 1/ .4 - - 0.8 0. 4 0.3 0.2 0.2Tax .4 .3 e6 0.6 0.5 0.5 0.5 0.4

Net Drofit 3.8 4.0 2.0 1.5 2.2 2.6 2.7 2.7

Net profit and Dividends

Net profit as . of 30.4 36.9 15.6 16.2 27.3 39.2 46.3 50.9year-end share capital

- a s %1,0 ofaverage equity 22.4 22.5 12.5 12.0 15.7 22.0 21.5 19.8

'ebt To Equity Ratio

Total debt/equity 4.9:1 4.7:1 6.o:1 7.3:1 7.7:1 7.1:1 6.4:1 5.8:1As per Bank 3.2:1 3.3:1 4.4:1. 5.4:1 6.1:1 5.8:1 5.3:1 4.9-)1

definition 2/Debt coverage

Interest and 3/ 17:1 2.14:1 2.1:1 2.2:1 2.3:1 2.L.:1 2.6:1Principal coverage

Lncome from loans and cost of resourcesaverage cost of 5/

resources 4/ 3.7 4.1 5.3 5.2 5.14 5.6 5.7 5.8Average income frorm

loans 7.5 7.5 8.9 8.7 9.0 9.3 9.6 9.8

1/ As from FY-75, provisions are estimated at 2% of portfolio increase2/ i.e. including in equity maturities on the Goverment loan maturing after repayment

of the proposed Bank loan.3/PAT + i l-t)_+ L.C.

i (1-t) + RTcluding government loan (0% interest) and share capital (10% cost)

./ Excluding cost of Chase loan: 5.0

17 CDAugust 6,1975

ANFX 1 3

BANQUE IVOIRIENNE M DEVL OPPEMENT INflJSTRIMJ

Summarized Balance Sheetsas of September 30(in CFAF million)

1971 1972 1973 197L 7-31-75(audited) (audited) (audited) (audited) (unaudited)

ASSETS

Current Assets (net) 3514 224 256 448 818

Portfolio-Bonds 2 17 11 17 34Long-term loans 3506 4353 5114 6627 7974Medium-term loans 1119 1122 13514 2055 2428

(of which rediscounted) (553) (807) (1172) (1398) (1673)Equity investments 132 371 394 507 584

Total 4759 5863 6873 9206 11020(less provision) (13) (160) (149 (153) [155)

7824 -57-0 3- 6724 9053 10865Fixed assets (net) 163 162 147 139 137

Total 5141 6089 7127 9640 11820

LIABILITIES

Share Capital 700 700 700 1050 1050Reserves 157 338 556 319 506 1

Equity 857 1038 1256 1369 1556

Goverrment loan 1250 1250 1250 1250 1250

Borrowings:BCEAO 553 807 1172 1385 1651AID 1346 1346 1315 1248 1310Kfw 735 848 959 1168 11490CAA 400 800 1175 2025 2675 /CCCE - - - 195 355Chase - 1000 1260DEG - - _ 273

Total 3034 3801 4621 7021 9014

TOTAL 51141 6089 7127 9640 11820

1/ Including provisional profits before taxes 180y/ Including short-term loan - 800

DFCAugust 6, 1975

ANNEX 14Page 1 of 2

BANQUE IVOIRIENNE DE DEVELOPPEMENT INIDJSTRIE

Assumptions for Financial Projections

1) Approvals - CFAF 4.3 billion in FY-76, increasing by about 10' per annum.Breakdown

Equity investments: CFAF 100 million/yearLoans: Two thirds loans with an average maturity of 10 years

(including 3 years grace period)

Twenty percent discountable loans with an averagematurity of 6 years (including 1 year grace period)

The remainder (about 15%)in non-discountable mediumterm loans (average maturity of h years without anygrace period)

2) Disbursements - Long-term loans: 40% year of approval, 40% second year20% third year.

Medium-term loans: 60% year of approval, 40% second yearEquity investment: 100% year of approval.

3) Average interest on loans -Medium-term discountable loans: 8.25% 1/Other loans: long-term loans: 9.5% in FY-75 increasing

progressively to 10% in FY-79medium-term loans: 8% in FY-75 increasing

progressively to 9% in FY-79

L.) Average cost of debt - Discount at Central Bank: 5.75% 1/Other resources: real cost for loans signed

(see Annex 11); 8% for other long-term resources

5) Average return on short-term investments - 6.5%

Average return on equity investments: 5%

6) Provisions for Losses - 2% of annual increase of total portfolio

7) Admiistrative expenses (excluding depreciation) have been projected toincrease by 25% in FY-75, and conservativelyby 10% later on.

A As =m January 1976, the average interest on discountable loans, and theaverage cost of discountable funds may start to increase above the figures

:eted; however, it is expected that the spread to BIDI on discountableo :-ons will not be modified: thus the effect on profits would be nil.

7p-

ANNEX l4Page 2 of 2

PROJECTIONS

(CFAF Million)

FY-75 FY-76 FY-77 FI-78 FY-79

* Approvals

Long-term loans 2,672 2,800 2,750 3,000 3,300

Medium-term loan 1,556 1,500 1,450 1,600 1,800

(of which redis-countable) (840) (760) (840) (920) (1,000)

Equity Investments 140 100 100 100 1002/

Total 4, 368 4,400 4,300 4, 700 5,100

Disbursenents

Long-term loans 2,570 2,781 2,752 2,860 3,070

Medium-term loans 1,684 1,844 1,470 1,6 40 1,780

(of which discount-able) (M5h) (982) (808) (888) (968)

Equity investments 159 100 100 100 lOO

4,413 4,725 4,322 4,600 41,950

1/ Commitments take place one week after approval, since BIDI send, immediatelyafter approval, td the borrower a letter detailing the conditions of theLoan; the client must answer within 8 days. The establishment of a formalcontract takes an average of 3 months.

2/ of which loans financed,under the, CIDA line of credit: 1320 for the two years.

DFCDAugust 6, 1975

Annex 15

BANQUE IVOIRIEN'NE DE DEVELOPPENT INUISTRIEL

Projected Income Statements(CFAF million)

(FY ending September 30)

FY-74 FY-75 FY-76 FY-77 FY-78 FY-79

INCOME

Interest on loan 670 878 11)44 1395 1608 1806

Interest on short-term investments 12 15 6 5 2 3

Dividends 1 29 31 41 41 31

Other 33 30 30 30 30 30

Total 716 952 1211 1)471 1681 1870

CRARG;S

Administrative expenses 1)47 188 213 243 276 309

(of which depreciation) (20) (20) (20) (20) (20) (20)

Financial charges 342 442 585 706 803 904

Provision for losses 9 87 56 )40 32 32

498 717 854 989 1111 1245

Earnings before tax 218 235 357 492 570 625

Tax 54 65 70 80 84 90

Net profits 16)4 170 287 )412 486 535

Allocated to

Reserves 90 86 192 307 381 420

Dividends 74 84 95 105 105 105

j/ Interest received is calculated net of TPS tax.

MFCDAugust 6, 1975

ANNEX 16

BANQUE IVOIRIENNE DE DEVELOPPEMENT INDUSTRIEL

Projected Balance Sheets as of September 30(in CFAF million)

ASSETS 1974 1975 1976 1977 1978 1979(aEctual)

Current assets (net) 465 123 134 58 22 110

Portfolio

Long-term loans 6,627 8,347 10,178 11,830 13,290 14,660Medium-term loans 2,o55 3,036 3,864 4,114 4,372 4,665(of which discount-

able) (1,398) (1,932) (2,159) (2,302) (2,433) (2,596)Equity investments 507 666 766 866 766 666

Total 9,189 12,049 14,808 16,810 18,428 19,991(less provision) _(153) (240) (296) (336) (368) (400)

Total (net) 9,036 11,849 14,512 16,474 18,060 19,591

Fixed assets (net) 139 150 150 150 150 150

Total assets 9_640 12,122 14,796 16,682 18,232 19,851

LLOILITIES

Share capital 1,050 1,050 1,050 1,050 1,050 1,050Reserves 314 418 646 1,005 1,422 1,878

Total 1,369 1,468 1,696 2,055 2,472 2,928

Government loan 1,250 1,250 1,250 1,250 1,250 1,250

Borrowings:

local 3,,410 4,307 3,734 3,577 3,310 3,173foreign 3,611 5,097 8,116 9,800 11,200 12,500

Total 7,021 9,404 11,850 13,377 14,510 15,673

Total liabilities 9,640 12,122 116796 1 18,232 19,851

IFCDAugust 6, 1975

ANNEX 17

BANQUE IVOIRIENNE DE DEVELOPPEMENT INIEJSTRIEL

Projected Sources and Uses of Funds(CFAF million)

(FY ending September 30)

SOURCES FY-75 FY-76 FY-77 FY-78 F_-79

Net profit plus provi- 290 399 524 574 613sion for losses, alloca-tion to FNI, anddepreciation

Loan collection 1,513 1,984 2,320 2,782 3,187(of which discountable) (420) (665) (665) (755) (805)

Drawndown on borroi*ngO:

Local 2,067 892 808 888 968Foreign 1,611 3,351 2,086 1,819 1,772

Sales of shares ___. 2QO 200

Total sources 5)481 6,626 5,738 6,263 6,740

USES

Disbursements onl loans 4 2h54 4,625 4t,222 4,500 43850(discountabib) t6S4) (892) (808) (888) (968)

Disbursement of equit* 159 100 100 100 100investments

Repayment on borro*ings

Local 1,170 1,465 965 1,155 1,105(BCEAO) (420) (665) (665) (755) (805)Foreign 125 332 402 419 472

Dividends 84 95 105 105 105

Fixed assets 3) 20 20 20 20

5,823 6,637 5,814 6,299 6,852

Variation of netcurrent assets (342) 11 (76) (36) 88

IFCDSeptember 10, 1975

ANNEX 18

BANQUE IVOIRIENNE DE DEVNLOPPEMENT LIDUSTRIEL

Estimated Disbursement Schedule (CY)

($foGo)

1976

3rd Quarter 2004th Quarter 400

1977

1st Quarter 6002nd Quarter 8003rd Quarter 10004th Quarter 1000

1978

1st Quarter 8002nd Quarter 8003rd Quarter 6004th Quarter 600

1979

1st Quarter 4002nd Quarter 4003rd Quarter 2004th Quarter 200

Total 8000

DFCDSeptember 10, 1975